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Apr 05, 2019

The week in IR: Hong Kong securities watchdog cracks down on margin finance, and SEC sides with Exxon on shareholder climate proposal

This week’s investor relations-related stories from around the web

Hong Kong’s securities watchdog said it is cracking down on margin finance after a number of high-profile collapses in the share prices of traded companies, reported the Financial Times. The Securities and Futures Commission recommended guidelines that would block brokers from offering margin loans for stock purchases of more than five times clients’ capital. The new rules are set to be introduced on October 4.

ExxonMobil has been cleared by the SEC to block a shareholder resolution on disclosing and setting greenhouse-gas reduction targets starting in 2020, saying the mandate would result in micromanagement, according to Pensions & Investments. The resolution was filed in December by a group of institutional investors led by the New York State Common Retirement Fund and the Church of England’s investment fund. Thomas DiNapoli, the New York State comptroller and sole trustee of the $204.4 bn pension fund, called the SEC ruling ‘a bump in the road’, but vowed to continue pressing Exxon and other companies on climate risk.

The Wall Street Journal reported that Myron Brilliant, the US Chamber of Commerce’s executive vice president, said the US was moving toward an ‘end game’ in trade talks with China but added that they are unlikely to finalize a deal this week. US President Donald Trump and Chinese President Xi Jinping are due to meet in a summit, reported the paper, noting that this indicated the two sides are close to a deal.

Bloomberg’s opinion piece discussed the difficult balance investors face when trying to integrate ESG principles into their asset-allocation strategies. It noted that asset managers find themselves at the sharp edge of the ESG debate because of their perceived ability to influence the companies they invest in. As a result, the industry is ‘drowning in consultations’ about the standards, the publication pointed out, quoting Jessica Ground, global head of stewardship at Schroders.

According to the FT, UniCredit, Italy’s banking giant, is plotting a counterbid to take control of Commerzbank as mega-merger talks between the German lender and rival Deutsche Bank begin to falter. The publication said any deal between UniCredit and Commerzbank would need approval from the German government, the Frankfurt-based lender’s biggest shareholder with a 15 percent stake.

The Guardian reported that the hedge fund founded by billionaire investor Ken Griffin has made a £60 mn ($78.6 mn) bet that the share price of Ryanair will fall, the first time a short position of this size has been reported for the budget airline. Citadel Europe took a 0.56 percent short position in Ryanair on April 2, according to short-selling data reported to the Central Bank of Ireland. Ryanair is potentially exposed to disruption as the UK leaves the EU.