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Jan 06, 2023

The week in investor relations: Global recession looms, foreign investors lose faith in UK bonds and Hong Kong game firm bets on metaverse

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

– A third of the global economy will be in recession this year, the head of the International Monetary Fund (IMF) warned. The BBC reported that IMF managing director Kristalina Georgieva said 2023 will be ‘tougher’ than last year as the US, EU and China see their economies slow. It comes as the war in Ukraine, rising prices, higher interest rates and the spread of Covid-19 in China weigh on the global economy. In October the IMF cut its global economic growth outlook for 2023.

Yahoo! Finance reported via Bloomberg that the SEC pushed back on Binance.US’ plan to buy bankrupt crypto lender Voyager Digital in a deal valued at about $1 bn, according to a bankruptcy court filing. The purchase agreement underpinning the deal doesn’t include sufficient detail about Binance’s ability to close the transaction, the SEC said in a limited objection earlier this week. More disclosure is needed about what Binance’s US operations will look like following the deal, along with more information about how customer assets will be secured, lawyers for the SEC said.

– The Financial Conduct Authority (FCA) extended temporary measures that alter the 10 percent drop rule, noted FTAdviser. In a statement in December, the FCA said the temporary measures will remain in place until parliament has ratified a statutory instrument that repeals the rule. The controversial 10 percent drop rule was introduced by Mifid II in 2018 and requires that clients are informed by the end of the working day if their portfolios drop by 10 percent or more in a certain period, which is at least quarterly.

Bloomberg (paywall) reported foreign investors sold off UK government bonds at the fastest pace on record over the three months to November, despite Prime Minister Rishi Sunak’s efforts to stabilize the economy after a disastrous September fiscal plan. Figures from the Bank of England show that overseas investors sold a total of £38.4 bn ($45.5 bn) of government debt between September and November, renewing concerns about the weak pound and rising borrowing costs.

– Meanwhile, the Financial Times noted in a report that foreign investors in Chinese equities have a problem. China’s growth offers the hope of big returns over the coming decade, but on ESG ratings, its companies rank lower not only than western nations, but also below most emerging markets. The combination of the world’s biggest consumer market with fast-growing technology and services sectors has attracted global investors willing to look the other way on censorship, surveillance, environmental, labor and other human rights abuses.

– In tech news, Hong Kong-based game software company Animoca Brands aims to raise $1 bn for its metaverse investing fund in the early part of this year, softening previous ambitions to raise as much as $2 bn. Quoting the firm’s chairman Yat Siu, Decrypt noted in its report that the actual fund-raising process will take place in the first quarter of this year. Siu said that while the market is not ‘super optimistic’ following the FTX meltdown, there are still plenty of sources of capital for the new venture.

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