The week in investor relations: Nissan faces angry shareholder meeting and markets respond to the coronavirus
– While issuers are disclosing that they acknowledge environmental and social risks to their businesses, they are light on specifics, according to a new study by the Alliance for Corporate Transparency. Reuters reported that 54 percent of the 1,000 companies covered by the research said they understood the climate risks that apply to them, but only 23 percent provided information about what those risks are. The study was conducted in partnership with the European Union’s Non-Financial Reporting Directive, which came into effect in 2018 and monitors the information companies release about ESG risks.
– Bloomberg reported on Monday that the S&P 500 Index fell following Apple’s announcement that it will miss sales targets due to the coronavirus impacting the company’s manufacturing and sales demand. ‘We do not expect to meet the revenue guidance we provided for the March quarter,’ the company said in a statement, adding that it was ‘experiencing a slower return to normal conditions’ than expected.
‘The market has largely ignored what’s going on with the coronavirus in terms of what impact it might have, but I’m not sure that’s entirely appropriate,’ Jeff Mills, chief investment officer at Bryn Mawr Trust, told Bloomberg. ‘It’s likely to be temporary and the economy may bounce back, but this is different from what we saw with Sars. China is a much larger, more entwined piece of the global economy.’
– Democratic presidential-nominee contender Michael Bloomberg unveiled his plans for Wall Street on Tuesday. CNBC reported that Bloomberg’s priorities place him in line with some of his more left-leaning running-mates, such as Elizabeth Warren. Bloomberg’s plan includes strengthening the Volcker Rule and the Consumer Financial Protection Bureau and enabling the Department of Justice to imprison people for financial infractions.
– HSBC announced on Tuesday that it would be cutting 35,000 jobs and $100 bn in assets over the course of the next three years. Reuters reported that the company intends to shrink its investment banking business and revamp its US and European business ‘as it grapples with slowing growth in major markets, the coronavirus epidemic, Britain’s European Union exit and lower central bank interest rates.’
The bank will close its European stock trading entity and has announced that it will suspend share buybacks for the next two years in order to pay for the restructuring. It has bought back $6 bn of its own shares since 2016.
– JPMorgan is planning a management reshuffle, Reuters reported in an exclusive on Tuesday. The change at the top will see two new managing directors promoted, as well as the creation of a new executive committee of global chairs that will be focused on winning business from clients.
Pamela Barbaglia of Reuters writes: ‘JPMorgan’s leadership makeover highlights the pressures big investment banks are under to retain senior staff in the face of increasing competition from rival boutiques that can attract seasoned bankers with more entrepreneurial roles. Wall Street firms face a tricky balancing act to keep their long-serving top managers happy while providing promotion opportunities for the next generation of leaders.’
– Nissan’s new chief executive Makoto Uchida faced angry shareholders at what the Associated Press described as ‘an extraordinary shareholder meeting’. The shadow of former chair Carlos Ghosn – who was charged with financial misconduct in November 2018 and recently fled Japan for Lebanon – hung heavy over the meeting. Uchida apologized to shareholders for allowing Ghosn’s alleged misconduct to occur and promised better governance, transparency and financial results. Ghosn has denied all wrongdoing.
AP reported, however, that shareholders continued to vent their frustration with executive pay and Ghosn’s fugitive status, with one shareholder even suggesting the company should place a bounty on Ghosn’s head.
– The Wall Street Journal reported that UBS Group CEO Sergio Ermotti is stepping down and will be succeeded by ING Group boss Ralph Hamers. UBS, Switzerland’s largest bank by assets, said Hamers will join its board in September and become CEO on November 1. Ermotti has been UBS’ CEO since 2011 and was expected to announce his departure this year or next.
UBS chair Axel Weber said Hamers is ‘the right CEO’ to lead the company through changes across the banking industry, as a ‘seasoned and well-respected banker with proven expertise in digital transformation.’ He thanked Ermotti for ‘adding a successful chapter to the history of this more than 150-year-old bank.’
– The UK's Financial Reporting Council (FRC) has launched a major review into whether companies and their auditors are adequately reflecting the financial risks of the climate crisis in their accounts, according to The Guardian. The FRC plans to use the review to make sure companies are being clear with investors about their exposure to climate-based risks.
FRC chief executive Sir Jon Thompson said company reports and accounts were ‘essential to understanding how the corporate world is responding to the challenge of climate change.’ The FRC will also examine whether companies have adopted the recommendations put forward by the Taskforce on Climate-related Financial Disclosures, which was set up to highlight the financial exposure of companies to the risk of climate chaos.
– There were mixed reports about the effect the coronavirus is having on the stock markets. Reuters reported on Thursday that US stock indexes fell, suggesting that two illness-related deaths in Japan and an increase in diagnoses in South Korea was influencing investor sentiment.
But the New York Times reported that the S&P 500 was up 5.6 percent from its levels at the end of January, when the World Health Organization first declared a global health emergency in relation to the coronavirus. The NYT cited Moody’s Investor Service, which this week said if the virus was contained in the first quarter of this year, it would likely have only a limited effect on supply chains and tourism.
– The Associated Press reported on Thursday that Morgan Stanley is buying E-Trade Financial, an online brokerage that boasts 5.2 mn client accounts and $360 bn in retail client assets. Morgan Stanley currently has 3 mn client relationships and $2.7 tn in client assets, according to the AP reports.
E-Trade’s stock rose nearly 24 percent after the announcement, while Morgan Stanley’s stock fell 4 percent, with AP reporting that this reflects ‘investors’ concerns that it may be paying too high a price’. Mike Pizzi, E-Trade’s CEO, will continue to run the company once it is integrated into Morgan Stanley. The companies expect the deal to close before the end of the year.
– The combined revenues of the world’s 12 largest investment banks fell by 4 percent last year, the Financial Times reported. The combined revenues of $147.5 bn are the lowest since the financial crisis, prompting banks to cut 6 percent of workforces in trading and investment banking divisions. Revenue at the equity trading businesses were down by 10 percent, according to industry data from Coalition.