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Dec 02, 2022

The week in investor relations: BlackRock hit by anti-ESG divestment, ECB verdict on crypto plunge and a growing ‘sell-side indicator’

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

– The state of Florida’s CFO said this week his department would pull $2 bn worth of its assets managed by BlackRock, according to MSN via Reuters. This is the biggest such divestment by a state opposed to the asset manager’s ESG policies. While the move will hardly dent BlackRock’s $8 tn in assets, it underscores how the backlash among many Republican politicians against ESG investing, which they see as promoting a ‘woke agenda’, is gathering steam.

– Wall Street is growing less bearish, said Bank of America strategists led by Savita Subramanian. A report by Bloomberg (paywall) stated that the bank’s so-called sell-side indicator, which tracks the average recommended allocation to stocks by US sell-side strategists, remains within 2 percentage points of a buy signal, its closest since 2017. The indicator rose 56 basis points to 53.3 percent in November, just as the S&P 500 notched up its second consecutive month of gains.

– A crypto entrepreneur said his net worth fell from more than $26 bn to $100,000 after his company imploded, according to a report by Sky News. Sam Bankman-Fried admitted it has been a ‘bad month’ after FTX collapsed into bankruptcy, leaving thousands of people frozen out of their savings. Bankman-Fried, who once positioned himself as a savior for stricken firms, has been accused of misusing customer funds and moving $10 bn out of the company in secret. At least $1 bn is reported to have vanished.

– The European Central Bank (ECB) said Bitcoin is on an ‘artificially induced last gasp before the road to irrelevance’, in a scathing intervention arguing against giving regulatory legitimacy to the cryptocurrency, The Guardian reported. In a strongly worded blogpost, senior ECB staffers Ulrich Bindseil and Jürgen Schaaf criticized Bitcoin for being a hotbed of illegal transactions that brings reputational risk for any bank that gets involved with the sector. The value of the digital currency has plummeted from a peak of almost $70,000 to a low of $16,000 since the collapse of crypto exchange FTX, before stabilizing at about $20,000. But the ECB authors said even this stabilization is likely to be false.

– According to Reuters (paywall), HSBC identified $1.7 bn of extra costs that can be stripped out next year, according to the bank’s CEO Noel Quinn, as the company battles to improve returns amid calls from its biggest shareholder for it to be broken up. The cuts – on top of existing targeted savings – are needed to help HSBC control costs amid high inflation, Quinn told a Financial Times conference in London, adding that the bank’s overall target of costs rising 2 percent next year remained unchanged.

– This has not been an easy year for China or investors in the country, reported the Financial Times (paywall), characterized by an underwhelming stock market, a weakening renminbi and capital outflows, especially from the fixed-income market. Neither trend, though, necessarily stands out in a global context. The hawkish turn by the US Federal Reserve on monetary policy harmed stock markets around the world and virtually every currency has depreciated, except those tightly pegged to the dollar.

Staff Writers

The staff writers on IR magazine are from our team of highly experienced journalists.