The week in investor relations: Rate cuts, cancelled IPOs and bearish predictions
– The US Federal Reserve announced a surprise interest rate cut of half a percentage point as the number of coronavirus cases around the world continues to grow, reported CNBC. ‘The coronavirus poses evolving risks to economic activity,’ said the central bank in a statement. Investors were spooked by the move, with stock markets falling after the announcement. Some commentators questioned the extent to which interest rate cuts could alleviate the supply-side damage caused by the virus.
– Warner Music Group and Cole Haan are among the largest companies to push back IPO plans amid the market volatility caused by the coronavirus outbreak, noted Reuters. The two companies expected to begin holding formal meetings with investors this week but have now cancelled those plans, according to Reuters, citing sources familiar with the situation. Both companies declined to comment for the story.
– The impact of the coronavirus on the stock market is likely to get worse before the crisis is over, warned Deutsche Bank analysts, according to Bloomberg. The bank’s ‘base case’ is that total declines could reach 15 percent-20 percent from the peak. Currently the S&P 500 is down around 10 percent. ‘Just two weeks in, it is much too early to declare this episode as being done. In our reading, equities are yet to price in any drops in macro and earnings growth from the expected slowdown in activity,’ said the bank in a note.
– Two major asset managers have announced new measures to tackle a lack of diversity on boards, reported the Financial Times (paywall). RBC Global Asset Management will ‘vote against all members of the nominating or governance committees at the annual meetings of businesses where women did not make up a quarter of the board,’ noted the newspaper, while Columbia Threadneedle is ‘planning to target companies with a lack of women in senior leadership, an extension of its policy targeting board diversity laggards’.
– Hedge fund manager Christopher Cohn has written to UK and central banks in an attempt to cut the flow of funding to the coal industry, reported Reuters. He called on the UK banks to disclose their lending to coal projects and classify them as high-risk loans. In the letters to central banks, he called for measures that would make it harder for banks to finance coal plants, as well as regulation to force more disclosure by the financial industry over its exposure to coal.
– Sampension, one of Denmark’s main pension funds, divested from more than 50 coal firms during 2019, reported IPE. The firm recently implemented a new climate strategy that includes banning investments in companies that receive more than 30 percent of revenues from coal or tar sands, stated the article. But the fund’s CEO Hasse Jørgensen said it is governments that are best placed to lower greenhouse gas emissions, via ‘global legislation, taxation and other economic incentives’.