The week in investor relations: Porsche IPO success, China lags rest of Asia for first time since 1990 and turmoil in UK markets

– Porsche enjoyed a ‘landmark’ debut in Frankfurt this week, noted CNBC, in what it said was one of the biggest public offerings in Europe ever. Shares of the iconic sports car brand initially traded at €84 ($81) on Thursday morning after they had been priced at the top end of their range late Wednesday, at €82.50. It values the company at roughly €75 bn. ‘We were convinced despite the challenging environment this IPO would prove successful, and we were right,’ Arno Antlitz, Volkswagen’s chief financial officer, told the news outlet.

– China’s economic output will lag the rest of Asia for the first time since 1990, reported the Financial Times (paywall), citing new World Bank forecasts that ‘highlight the damage wrought by President Xi Jinping’s zero-Covid policies and the meltdown of the world’s biggest property market’. The World Bank revised down its forecast for gross domestic product growth in the world’s second-largest economy to 2.8 percent, compared with 8.1 percent last year, and from its prediction in April of between 4 percent and 5 percent for this year. At the same time, expectations for the rest of east Asia and the Pacific region have improved.

‘China, which was leading the recovery from the pandemic, and largely shrugged off the Delta [Covid variant] difficulties, is now paying the economic cost of containing the disease in its most infectious manifestation,’ Aaditya Mattoo, the World Bank’s chief economist for east Asia and the Pacific, told the paper.

– The British pound crashed to a record low against the US dollar on Monday amid ‘growing fears about the stability of UK government finances,’ said CNN. The currency slump followed Chancellor of the Exchequer Kwasi Kwarteng’s mini-budget announcement last week that the UK would implement the biggest tax cuts in 50 years at the same time as boosting government borrowing and spending in the face of high inflation. The news prompted turmoil in the UK, with the Guardian reporting on the Bank of England’s subsequent intervention, the pulling of mortgage deals and the sell-off of pension funds.

– In other UK news, the FT reported that the UK stock market has been hit by a flurry of acquisitions and a collapse in IPOs, which are on course for their weakest year in more than two decades. UK companies valued at more than £41 bn ($45 bn) have been acquired so far this year, while new businesses have managed to raise just £574 mn in the past nine months, it said, citing data from Dealogic. The poor pipeline of new companies coupled with acquisitions of existing public companies by overseas rivals have added to fears about the health of the UK market. The last time IPOs fell to near this level during the full year was 2009, when just £1 bn was raised.

– In the US, Bloomberg (paywall) reported that dealmakers had gone into the summer on a record run of eight consecutive $1 tn-plus quarters. ‘In the end, they didn’t come close to making it nine,’ said the news agency. Little more than $640 bn worth of deals have been agreed since the start of July, Bloomberg data shows – something the agency said will ‘make this the worst quarter for mergers and acquisitions since [Q2] 2020, when the Covid-19 pandemic brought dealmaking to a halt’.

– US regulators fined 16 financial firms including Barclays, Bank of America, Citigroup, Credit Suisse, Goldman Sachs, Morgan Stanley and UBS a combined $1.8 bn after staff discussed deals and trades on their personal devices and apps, according to Reuters (paywall). The ‘sweeping industry probe’, first reported by Reuters last year and subsequently disclosed by multiple lenders, is a landmark case for the SEC and the Commodity Futures Trading Commission, marking one of their largest collective resolutions.

From January 2018 through September 2021, the banks’ staff reportedly routinely communicated about business matters such as debt and equity deals with colleagues, clients and other third-party advisers using applications on their personal devices such as text messages and WhatsApp, the agencies said. Reuters added that the institutions did not preserve the majority of those personal chats, violating federal rules that require broker-dealers and other financial institutions to preserve business communications.

­– The Wall Street Journal (paywall) reported that Unilever CEO Alan Jope plans to retire at the end of next year. The consumer goods company said it would conduct a formal search for a successor and consider both internal and external candidates. Jope this year faced the emergence of activist investor Nelson Peltz’s Trian Fund Management as one of Unilever’s largest shareholders. Trian said in a statement that it was ‘sorry to learn’ of Jope’s decision and that Peltz, who joined the board of Unilever earlier this year, looked forward to ‘being part of the process of choosing a new leader for the company’.

– The Guardian reported that thousands of workers around the US are going on strike or threatening to do so in October amid a surge of labor union activity. Support for labor unions in the US has grown over the past year, as a surge in organizing has resulted in workers winning union elections at major companies including Starbucks, Amazon, Apple, Chipotle, Trader Joe’s, Google, REI and Verizon.

Union election petitions increased 58 percent in the first three quarters of fiscal 2022 compared with 2021. Public support for labor unions is at its highest point since 1965, according to the most recent Gallup poll, with a 71 percent approval of labor unions in the US. According to the labor action tracker at Cornell University, strikes in 2022 have significantly outpaced strike activity in 2021, with 180 strikes involving 78,000 workers in the first six months of 2022, compared with 102 strikes involving 26,500 workers in the first six months of 2021.

– In related news, Starbucks said it wants to start contract negotiations next month at hundreds of US stores that have voted to unionize, CNBC reported. The company said it sent letters to 238 stores offering a three-week window in October to start negotiations. All of those stores have voted to unionize this year in elections that were certified by the National Labor Relations Board. ‘We look forward to these negotiations and hopefully setting dates and securing locations for contract bargaining,’ the company said in a post on its website.

Casey Moore, a labor organizer and union spokesperson, said stores have reached out to Starbucks to begin negotiations since May but have received no reply. Starbucks said Workers United, the union organizing Starbucks’ stores, has directed the company to schedule all negotiations through the union’s president.

– According to the WSJ‘s Risk & Compliance Journal, a newly operative US law is imposing major hurdles on the importation of goods from China’s Xinjiang region, home of the Uyghur people and other minority groups. Under the Uyghur Forced Labor Prevention Act, goods from Xinjiang are presumed to be made with forced labor – although importers can try to rebut that presumption – a legal shift that has forced companies to examine their supply chains and compliance efforts.

Robert Silvers, a US Department of Homeland Security undersecretary who chairs the inter-agency Forced Labor Enforcement Task Force, called on companies and their top executives to make examining supply chains a priority compliance issue to identify goods tainted by forced labor.

– According to Reuters, Elon Musk’s lawyers urged a federal appeals court to throw out a provision in his 2018 consent decree with the SEC requiring a Tesla attorney to vet some of his posts on Twitter. In a brief filed with the 2nd US Circuit Court of Appeals in Manhattan, lawyers for Musk called the pre-approval mandate a ‘government-imposed muzzle’ that inhibited and chilled his lawful speech on a broad range of topics. The SEC declined to comment. It is expected to file its own brief with the appeals court.

– The board of the Australian Securities Exchange awarded its outgoing chief executive a bonus of more than A$1 mn despite opposition from shareholders angry at a late-running back office project, reported Global Investor Group. More than 30 percent of shareholders voted at Wednesday’s AGM against the senior management compensation packages proposed for last year, which included A$1.2 mn ($787,000) for former chief executive Dominic Stevens. Speaking at the firm’s AGM on Wednesday, chairman Damian Roche acknowledged this represents the exchange’s first ever ‘strike’ in response to a shareholder question. Under Australian company law, two consecutive strikes rejections of a company’s remuneration plans would trigger a re-election of the board.