Americas: pushing the limits
This week it finally happened. Silicon Valley giant Apple
became the first US company to have a stock valuation of over
$1 trillion. The company’s recent decision to sell
its signature iPhone at a price point of around $1,000 has
played a part in pushing the stock price to over $200,
following better than expected sales.
Other news in Silicon Valley saw the Office of the
Comptroller of the Currency give fintech companies its
permission to make applications for a special banking charter.
The news, which came hours after the Treasury released a
fintech report, will allow these companies to become banks
should they so wish, but given the likelihood that state
regulators will launch a renewed push to appeal the decision,
there is unlikely going to be much action for the next few
months at least while companies weight up their
Last month the AT&T-Time Warner trial looked done, but
this week it opened right back up again. On Wednesday the judge
who gave the ruling decided to allow the court transcripts to
be reopened following a successful appeal from the government,
who appear set to derail the mega merger on antitrust
No weekly roundup would be complete without a mention of
President Trump and his favourite new toy, export tariffs.
After forming an unlikely alliance with the European Union
last week, Trump reinforced his desire to place a whole new
round of tariffs on Chinese imports this week –
leading to renewed concerns.
Asia Pacific: pushing forward
Hong Kong’s Securities and Futures Commission
has made amendments to the Codes on Takeovers and Mergers and
Share Buybacks. The changes include increasing the voting
approval threshold for whitewash waivers to 75% and empowering
the Takeovers Panel to require compensation to be paid to
shareholders who have suffered as a result of a breach of
provisions to the Takeovers Code.
The Hong Kong Monetary Authority (HKMA) released conclusions
on the public consultation relating to rules prescribing
loss-absorbing capacity (LAC) requirements to be made as
subsidiary legislation under section 19(1) of the Financial
Institutions (Resolution) Ordinance (Cap. 628). The proposal is
that authorised institutions whose failure could pose a risk to
the financial system in Hong Kong should be required to have
sufficient LAC to facilitate their orderly failure, should they
reach the point of non-viability.
Continuing its efforts to liberalise capital markets, China
is planning to resume normal trade in stock index futures.
Strict requirements on stock index futures trading were put in
after the 2015 stock market crash. Fang Xinghai, vice chairman
of the China Securities Regulatory Commission also said that
regulators would continue to work towards giving commercial
banks more access to China’s bond futures
The Asian Corporate Governance Association has released its
report on corporate governance in China. It provides an
overview, challenges and recommendations on improving the
role of Party organisations, boards of directors, supervisory
board, independent directors and audit committees in China.
EMEA: hard pushed
Buyside firms will be directly concerned by initial margin
rules in September. This may
impact derivative pricing and volume ahead of 2020 when all
counterparties trading over-the-counter derivatives are
included within the rules, and force upward pressure on prices.
One of the major challenges is that these smaller firms, which
will be included from September, don’t have the
same knowledge than those firms that are already subject to the
rules and have already had a year and a half of experience,
putting a strain on limited resources.
Germany is yet another country to intervene in a merger,
following its decision to block a Chinese
company’s takeover of Leifeld Metal Spinning. This
comes only a week after the government instructed state-owned
bank KfW to buy 20% of network operator 50Hertz to block State
Grid Corp of China’s bid. This is part of a
growing trend globally, following political successes of
protectionism, making it increasingly difficult for foreign
assets to acquire targets.
Utility tokens are in desperate need of regulatory
clarification and more coin offerings are being structured as
a hybrid of security and utility tokens to include both
institutional investors and retail investors. Security tokens
would not allow retail investors unless a prospectus is
published and approved, which is yet to happen. Therefore,
issuers are increasingly adopting a two-tiered approach.
Unfortunately, it is not clear precisely what constitutes a
utility token yet, and with Securities and Exchange
Commission chairman Jay Clayton claiming that every offering
he has seen is a security, clarification is needed