The week in investor relations: Storming the Capitol, a small-cap boost and hog futures
– The Wall Street Journal (paywall) reported that business leaders and trade groups called for an end to the violence in Washington, DC and a peaceful transfer of power after supporters of President Donald Trump stormed the Capitol where legislators were meeting to certify president-elect Joe Biden’s Electoral College victory. CEOs, including the leaders of Google and Bank of America, condemned the violence, while BlackRock chair and CEO Larry Fink called it ‘an assault on our nation, our democracy and the will of the American people.’ The Business Roundtable called on Trump and other officials to ‘put an end to the chaos and to facilitate the peaceful transition of power.’
– Despite the chaos at the Capitol, the Democrat win in Georgia will boost value and small-cap stocks, reported the Financial Times (paywall). ‘The market consensus is that Democratic control of both houses [of Congress] means stimulus and infrastructure spending, so in the near term that means more economic growth,’ Ben Laidler of Tower Hudson Research told the paper. ‘The stocks that are most driven by this are companies in cyclical industries and small caps, where earnings have been more depressed.’
– A ‘dizzying’ number of U-turns from the NYSE will see three Chinese firms delisted from the exchange, effective January 11, reported Reuters. On December 31 the NYSE announced plans to delist China Mobile, China Telecom Corp and China Unicom Hong Kong. On Monday this week, it did a U-turn after consulting with regulators before Wednesday’s decision, which marks a return to the original plan. Reuters said the ‘flip-flopping highlights the confusion over which companies were included in an executive order issued by Trump in November.’
– Bloomberg reported that shareholders in Fiat Chrysler Automobiles and PSA Group at separate meetings approved a merger to create Stellantis, the world’s fourth-largest automaker. Fiat Chrysler and PSA executives believe they will boost returns with scale more closely resembling Volkswagen and Toyota Motor Corp, and will have greater resources to compete in terms of electric cars and the technology industry.
– RBC Capital Markets said it had been ‘completely wrong’ on Tesla, with the broker updating its recommendation on the electric carmaker, reported Bloomberg. It reported analyst Joseph Spak as saying in a report that ‘there is no graceful way to put this other than to say we got [Tesla’s] stock completely wrong.’ The broker had maintained a sell-equivalent underperform rating on the company since January 2019, according to data compiled by Bloomberg – a period during which Tesla’s shares have surged by around 1,200 percent. On Thursday a further boost to the stock made Tesla CEO Elon Musk the world’s richest person, overtaking Amazon’s Jeff Bezos.
– The WSJ reported that Carl Icahn sold more than half his stake in Herbalife Nutrition and is giving up his seats on the nutritional-supplements company’s board. Icahn recently sold about $600 mn of his 16 percent Herbalife stake back to the company and, given that his holdings will go below the level stipulated in an agreement he has with the company, the five board seats held by his representatives will also be given up, the company said.
– ExxonMobil has, for the first time, disclosed the emissions that result when customers use its products, reported sustainability business site edie. The reporting of Scope 3 (indirect) emissions – which Exxon says in 2019 were equivalent to 730 mn metric tons of CO2 – comes as the company faces increased scrutiny from investors over ESG issues. In December, a new shareholder activist – Engine No 1 – published a letter addressed to the oil and gas giant’s board of directors for ExxonMobil to rein in its big spending ambitions, revamp executive pay and explore a push into clean energy.
– Finally, in a somewhat unusual story, the world’s biggest consumer of pork has kick-started the trading of hog futures on the Dalian Commodity Exchange in a move aimed at preventing the wild price swings seen over the past two years after an outbreak of African swine fever in 2018 led the culling of millions of pigs, reported South China Morning Post. Hog futures can serve players from breeders to animal-feed producers, according to Fang Xinghai, vice-chairman of the China Securities Regulatory Commission. ‘Breeders can capitalize on futures prices to arrange production plans and hedge against risks to stabilize price, ensure supply and shorten the ‘hog cycle’ for the pig-farming industry,’ Fang said at the launch ceremony.