The Communist party has a long tradition of intervening in Chinese stock markets by publishing bullish or bearish statements in its mouthpiece, the People's Daily. So when an article attacking a giant share placement from Ping An Insurance appeared under the pen name Lily in Monday's edition, the markets paid attention.
Ping An's announcement two weeks earlier that it planned to raise more than $20bn in a domestic secondary share placement and bond sale helped send Chinese stocks into a tailspin just when markets in the rest of the world were collapsing. So an official comment from the government criticising what would be the largest yet share sale by far in mainland China was welcome news to investors and helped push the benchmark index up more than 8 per cent on Monday.
The commentary was scathing in its criticism of companies that act without concern for the investing masses and use the stock market as an automatic teller machine to collect money at will. It also suggested new rules forbidding secondary placements within three years of - or that exceed the amount raised in - an initial public offering. This is a direct attack on Ping An, which raised $5bn in its IPO a year ago.
But it ended on a more harmonious note: "Only when the interests of all sides are protected will the stock market continue to run like a fountain, bringing moisture and nutrition to listed companies and investors."
Artisan's shadow
Warren East, Arm Holdings' chief executive, has fielded investors' brickbats before. He oversaw the British technology group's first profit warning in 2002, then took a beating from shareholders who accused him of overpaying for Artisan of the US in 2004. By mid-afternoon on Tuesday, Arm's shares had fallen to their lowest level since shortly before the completion of that deal.
This ought not to happen. The largest part of Arm's business designs microprocessors for the kinds of small portable devices the digerati and their disciples cannot be without - everything from smartphones to the most sophisticated heating controls. That licensing revenues in this business slipped between the third and fourth quarters of last year is not so surprising - the macroeconomic clouds are gathering and industry conditions, as Arm says, are uncertain. But the group's revenues sit on a solid foundation of royalties. That income would probably continue to grow even if Mr East and his team were to pack up the rest of the company and go home.
Artisan is Mr East's problem child. Now recast as Arm's physical intellectual property division, its aim is to license technology to the world's largest semiconductor companies for packing ever-more information into ever-smaller chips. The plan to develop Artisan was always a slow burner. On Mr East's four- to seven-year timescale, he needn't start worrying until the end of this year. But he is already concerned. Last year, Arm poured more resources into PIPD, rejigging its structure and moving an experienced board member to run it last September. The group says it can now offer technology up to date enough to attract the attention of the likes of Texas Instruments or Qualcomm. But so far, no deal has been forthcoming.
For a division that (including royalties) accounts for only 17 per cent of total group revenue, Artisan is casting a long shadow.
Question of credibility
International investment funds have to rely on a carefully nurtured credibility to challenge successfully entrenched power brokers. Protecting that credibility depends on choosing targets equally carefully. If they get it wrong, the market these funds claim to represent will stop listening.
Take the case of Generali. The Italian insurer has come under attack by a London-based activist fund, Algebris, since October. This week, Algebris seemingly received a boost in its campaign with the publication of a letter from Franklin Mutual, one of the largest US fund managers, which criticised Generali's apparent interest in expanding in the US. It also echoed Algebris's complaints about Generali's governance structure, with its two chief executives and Antoine Bernheim, its 83-year-old chairman,
Franklin's suggestion that the US financial sector is a mature market and thus devoid of opportunity for a company such as Generali is somewhat surprising. In niche areas - such as third-age products - where Generali is looking to go, the US is probably one of the fastest-growing markets in the world.
Perhaps even more surprising is Franklin's decision to question the governance of the only big European insurer to have maintained its stock market value over the past six months.
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