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Apr 21, 2023

The week in investor relations: U Power’s ‘raucous’ IPO, BlackRock rejects 60/40 portfolio and Asian investors trail on ESG risks

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

– The raucous debut of China-based U Power sent shares soaring 620 percent and triggered a bevy of halts for volatility as investors flipped shares of the newest company to list in the US, reported Bloomberg (paywall). The start-up, which aims to focus primarily on battery-swapping technology for electric vehicles, surged as high as $75 before closing at $43.18 after pricing its IPO at $6. It capped the best debut among companies to list in the US this year after blowing past the 255 percent boom seen for shares of Multi Ways Holdings. U Power was halted at least 22 times on Thursday after listing on Nasdaq. The company’s gross proceeds are expected to be about $14.5 mn, before deducting underwriting discounts, commissions and other offering expenses. 

– According to the Financial Times (paywall), BlackRock warned that a classic 60/40 portfolio will serve investors poorly over the long term, despite a simultaneous rebound for equities and bonds this year. The ‘traditional investing approach’ of a portfolio of 60 percent stocks and 40 percent fixed income made a comeback this year from its biggest downturn in decades in 2022, according to a report from the BlackRock Investment Institute the in-house research arm of the world’s biggest asset manager. The strategy has been a cornerstone for many asset managers for more than 30 years. It is based on the inverse correlation between bonds and equities and the assumption that when the price of one rises, the other falls.

– The FT also reported that Asian fund managers trail far behind their European counterparts in addressing ESG risks, according to the World Wide Fund for Nature (WWF) Singapore. The shortcomings were found in taking nature-based risks into account, as well as disclosure of responsible investing actions and governance.
Chinese asset managers’ ESG efforts were particularly lacking, with their average assessment score declining from last year, according to the WWF’s 2022 Respond assessment report, which calls for improvements so that resilient and sustainable portfolios can better protect nature and drive decarbonization.

– The BBC noted that investors who lost money when a fund managed by big-name stock picker Neil Woodford collapsed are in line for compensation. City regulator the Financial Conduct Authority (FCA) said people who had money invested when the fund was suspended could receive a share of £235 mn ($291.5 mn) in redress. That would amount to about 77p in every pound they had invested. For the money to be paid, investors will need to approve the plan and various other conditions will need to be fulfilled, such as the sale of some assets. Therese Chambers from the FCA said the proposal offered the best possible outcome for the 300,000 trapped investors who lost money.

– Criticisms of the SEC mounted as the agency remained unrelenting in its war on crypto, reported CoinTelegraph. On April 21, Web3 venture capital firm Paradigm published a policy piece on the problems with SEC registration. It claimed that SEC chair Gary Gensler’s ‘attempt to brute-force crypto assets that may not even constitute ‘securities’ into an ill-fitting disclosure framework is bad policy.’ Paradigm, which invests hundreds of millions into crypto and Web3 start-ups, said the SEC fails to provide crypto asset users and investors with the information they need. It also denied the SEC’s claims it offers crypto entrepreneurs a viable path to compliance.

– Meanwhile, Cryptoglobe reported that institutional investors were showing renewed interest in cryptocurrency investment products, with total inflows over the past week reaching $114 mn. The figure marks the fourth consecutive week of inflows, reaching a total of $345 mn, which nearly reverses a six-week outflow trend that totaled $408 mn.
Notably, the US and Germany led the way, contributing $58 mn and $35 mn, respectively, to the inflows. This surge in investment comes at a time when Bitcoin trading volumes remain relatively low, averaging a mere $5.6 bn per day compared with the full-year average of $12 bn.

Staff Writers

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