The week in investor relations: Companies under pressure over Roe vs Wade, worst April in 52 years for S&P 500 and Robinhood launches stock-lending program
– According to The Wall Street Journal (paywall), companies are facing pressure from shareholders, employees and local governments to take a stance on access to abortion as the US Supreme Court considers overturning Roe vs Wade. It is essential for companies that value talent and see gender equity as a core principle to support women’s reproductive health, said Jonas Kron, chief advocacy officer of Trillium Asset Management. Trillium submitted a shareholder proposal to The TJX Companies this year, asking it for a report on the risks it faces from laws restricting abortion access.
Kron said Trillium would talk to other companies in its portfolio over the next six months and ask them about how a patchwork of reproductive rights laws would affect their businesses. The firm will likely submit additional shareholder proposals on this topic, he said.
A leaked Supreme Court draft opinion published late Monday by Politico indicates the court may be preparing to overturn Roe. Chief Justice John Roberts confirmed in a statement that the draft was authentic, but he said it wasn’t necessarily the final resolution in the case.
– The Economist (paywall) reported the news that the S&P 500 had suffered its worst April in 52 years. At the start of the month, ‘as investors fretted about rising inflation, tightening monetary policy and the war in Ukraine, analysts at Bank of America predicted a ‘solid rally’ in the stock market, driven in part by the tendency for share prices to outperform during the month of April,’ said the publication. ‘Alas, the rally did not materialize.’ The S&P 500 has generated a return of 1.41 percent, on average, in the month of April since 1928 – the second-best month behind July. This year it tumbled by 8.8 percent, its worst showing since 1970.
– Robinhood launched a fully paid securities lending program, reported Reuters (paywall). The new service, part of the online broker’s diversification efforts, allows users to lend out shares they own through the popular app to market participants and passively collect a cut of the fees. Robinhood already makes money by lending out shares that its customers buy on margin, added the news agency, but the new fully paid program will include all shares held by its nearly 23 mn users, as long as they opt in and meet certain qualifications.
– The Financial Times (paywall) reported on the human trading error that caused a flash crash across European stocks this week, with Nordic equities hit particularly hard: Sweden’s benchmark OMX 30 tumbled as much as 7.9 percent on Monday before recovering to close 1.9 percent down. Market participants attributed the steep drops to Citi bungling a trade of a basket of shares that included many Swedish names, and took place on a day when markets in London were closed for a holiday. Citi later confirmed that one of its traders had ‘made an error when inputting a transaction’, without providing further details.
Markets in Paris, Amsterdam and Brussels were also affected by the sudden bout of selling, which took place over a five-minute period Monday morning, said the paper. Overall, the regional STOXX Europe 600 index slid as much as 3 percent before trimming its losses to trade down 1.5 percent.
– According to Institutional Investor, fund managers and their attorneys are worried about the SEC’s proposed private fund adviser rule, which it says contains a subtle language change: the new rule would make managers liable for ‘negligence’ rather than ‘gross negligence’ as had been the case previously. According to fund managers and attorneys talking to the publication, this means asset owners and allocators could even sue investment managers for investment losses.
– Traders Magazine reported that Fidelity launched The Fidelity Stack, its first immersive metaverse experience aimed at offering a new way to learn investing basics. Built in Decentraland, The Fidelity Stack features a multi-level design complete with a lobby, dance floor and rooftop sky garden for users to explore on foot – or even through teleport. In addition to providing a primer on different types of investment products, including ETFs, the publication said Fidelity’s entrance to the metaverse is also designed to celebrate the launch of the Fidelity Metaverse ETF, a new thematic ETF that provides access to companies that develop, manufacture, distribute or sell products or services related to establishing and enabling the metaverse.
– A German court ruled invalid the final two full-year financial statements of failed payments firm Wirecard, said the FT, in a ‘landmark decision’ the paper said opens the door for the collapsed firm’s administrator to reclaim €62 mn ($65.1 mn) in dividends and tax. The biggest single item is €47 mn in dividends that were paid in 2018 and 2019, continued the paper but, according to a person familiar with the proceedings, the administrator will try to recover dividends only from large shareholders, rather than retail investors. Apparently around 75 percent of the payouts appeared to be recoverable.
– Chinese company Ping An Insurance has taken on the role of shareholder activist, putting pressure on HSBC to consider a shake-up, according to the WSJ. Ping An wants HSBC to undertake an overhaul that would result in the market giving the bank more credit for its large Asian business, and make those operations less beholden to regulators in London. This is an unprecedented move into global shareholder activism for Ping An. A spokesperson said it wanted shareholders to take part in a debate about the future of the bank. ‘We will support any suggestions to improve the value of HSBC and improve its business management,’ the spokesperson said.
A spokesperson for the bank said ‘HSBC has a regular program of engagement with all our investors’ and pointed to the bank’s recent stock-price performance as evidence of its success. HSBC’s Hong Kong-listed shares are about level over the past 12 months, while the Hang Seng Index has fallen 28 percent, Refinitiv data shows.
– The Guardian reported that BP’s profits more than doubled to $6.2 bn in the first three months of the year, putting pressure on the UK government to ‘impose a windfall tax to aid households struggling with soaring energy and fuel bills’. The energy giant reported its highest quarterly profit in more than a decade – with the figure far higher than the $4.5 bn analysts had expected. BP announced a $2.5 bn share buyback program on the back of the bumper profits, with the paper noting that Bernard Looney, BP’s CEO, has promised the company will buy back at least $1 bn of shares every quarter while oil prices are above $60 a barrel. The war in Ukraine has driven Brent crude, the global benchmark, above $100 a barrel.
– The WSJ reported that the SEC will increase the size of its special unit devoted to investigating cryptocurrency frauds and other misconduct, following the agency’s push to get the unregulated industry to come under federal supervision. The SEC said it plans to add 20 investigators and litigators to its crypto assets and cyber-unit, which was created in September 2017. The commission has positioned itself as the main government bulwark against fraud in the $1.7 tn market. The SEC filed nearly 100 cryptocurrency-related enforcement actions from 2013 to 2021, according to Cornerstone Research, with most of those targeting new sales of digital coins.
‘Crypto markets have exploded in recent years, with retail investors bearing the brunt of abuses in this space,’ said SEC enforcement director Gurbir Grewal in a statement. ‘The bolstered crypto assets and cyber-unit will be at the forefront of protecting investors and ensuring fair and orderly markets in the face of these critical challenges.’
– Reuters reported that CDP said companies will have to set a much broader range of sustainability targets under draft new EU reporting standards. Authorities around the world are writing reporting standards to combat ‘greenwashing’ where companies exaggerate their credentials to attract investors. The European Financial Reporting Advisory Group recently set out its first draft sustainability standards for public consultation. Final standards will be sent to the European Commission by November for adoption.
They will be used by listed companies across the EU to implement mandatory ESG disclosure requirements under the bloc’s new Corporate Sustainability Reporting Directive. ‘The EU sustainability reporting standards are set to be the most ambitious standards globally,’ said Mirjam Wolfrum, director of policy engagement in Europe for CDP, adding that around half of reported emissions in Europe are not covered by targets currently.
– Alibaba shares took a hit on Tuesday following a Chinese state media report that an individual surnamed ‘Ma’ had been detained, said the FT. The news pushed down Chinese technology stocks that had been expected to rally on the promise of support from Beijing. Shares in Alibaba fell as much as 9.4 percent but pulled back to finish the day almost 2 percent lower after China’s state broadcaster CCTV amended its one-sentence dispatch to indicate the individual was not Alibaba’s billionaire founder Jack Ma. People familiar with the situation confirmed Jack Ma was not the person referred to in the report.