The week in investor relations: Record falls, short-selling bans and bear markets
– On Thursday, markets suffered their worst one-day fall since Black Monday 1987 amid the continuing spread of coronavirus around the world, reported Reuters. US stocks fell around 10 percent, while some markets in continental Europe dropped even further. Italy – the worst-hit in Europe – saw its main index lose 17 percent. Investors appeared spooked by US President Donald Trump’s travel ban on European nations, announced on Wednesday evening.
– Following huge falls in share prices on Thursday, some regulators moved to ban short-selling in selected stocks or whole markets, according to Bloomberg. Spain has banned short-selling in 69 stocks, targeting those that fell the most the previous day. Italy has selected 85 stocks where short-selling will be prohibited. South Korea’s financial regulator has taken the strongest action, banning short-selling of shares on major indices for six months.
– The Dow Jones Industrial Average officially entered bear market territory on Wednesday, the same day the World Health Organization classified coronavirus as a global pandemic, reported CNBC. By the end of the day, the index sat at more than 20 percent below its record high achieved on February 12. Goldman Sachs offered a note of optimism, saying the current fall is event-driven so markets could rebound strongly.
– The eruption of a global price war over oil pushed markets even further down during the week, explained the Financial Times (paywall). Following the failure of oil producers to agree a cut in production, Saudi Arabia announced it would slash prices and flood the market with oil, causing prices to collapse around 30 percent. The news put further pressure on the stocks of energy companies, with BP’s shares dropping to their lowest point for 24 years.
– Activist investor Carl Icahn said he had increased his stake in Occidental Petroleum to 10 percent, reported Marketwatch. Icahn has been critical of the oil company over its decision to buy Anadarko Petroleum for $38 bn. The activist wants to use Occidental’s AGM this spring to replace the entire board. Since the deal was agreed, the company’s market cap has dropped from $46 bn to less than $12 bn.
– Investment firms have significantly increased recruitment to stewardship and other ESG roles, noted the FT (paywall). According to an analysis by the newspaper, the largest investors doubled the number of people in their stewardship teams between 2017 and 2020. Over the same period, the number of other ESG roles increased fourfold. ‘It is one of the biggest trends we are seeing [in asset management recruitment],’ said Emma Wallis of the Buy-Side Club, a recruitment firm.
– Financial News reported that major banks have continued to cancel or postpone conferences amid the coronavirus outbreak. BNP Paribas, Goldman Sachs and Credit Suisse are among the firms to make recent changes to their schedules. Some conferences will still go ahead but as virtual events, such as Citigroup’s Digital Money Symposium 2020.