Shareholder rebellion against multinationals | Flow Traders Investment Competition | Week 21

Both the S&P 500 and Nasdaq have had a slight increase this week, with a 1.35% and 1.09% increase respectively. The FTSE 100 came out with a 1.08 percent increase, and the Dow Jones Industrial Average increased by 1.71%. The VIX dropped more than 18% last week.

President Trump has had a busy week, which included several major items that he proposed to and Congress. The Ministry of Foreign Affairs wants to stop any and all funding of the Northern Triangle of Central America, consisting of El Salvador, Guatemala, and Honduras. The initial reason for the funding was to ensure a decrease in illegal immigration to the USA, which mostly came from the above-mentioned countries. Trump stated that the countries did too little with the 700-million-dollar endorsement they received from the US. He does not only wish to cut the funding, but also shut down the Mexican border. The Mexican government responded by saying they found themselves to be “excellent neighbors”. At the start of his term, Trump has tried to improve migration laws, but has felt strong resistance from congress and the house of representatives.

National Economic Council director Larry Kudlow suggested that the Federal Reserve should reverse some of its recent interest rate hikes, stating that he was “echoing the president’s view”. In addition to cutting the rating hikes, Trump also implores the Fed to cease shrinking its balance sheet. Due to the uneasy relationship between Trump and the Federal Reserve, there is a slim chance of change in Fed policy. There has been an increase in sales of family homes, especially new homes, in America. Compared to last year, the sales of new homes has increased by 1.3%.

Both the Eurozone and the British economy find themselves in quite a kerfuffle due to the Brexit-deal rejection. The Euro-zone Manufacturing Purchasing Managers Index (PMI) dipped to 51.0 from December’s 51.1, barely above the 50-mark separating growth from contraction. The London house prices have suffered their biggest drop in a decade due to the Brexit, though some experts believe Brexit’s resolutions should bring greater activity in the future.

Lastly, there is a chance of a shareholder rebellion against multinationals. Due to the immovable position of multinationals on their compensation policy concerning the “turbo”. At the start of this year, there was quite some uproar because of the large compensation given to the CEO of Shell, Ben van Beurden, as well as the 50% increase in salary for ING-executive Ralph Hamers. Because of the shareholder rebellion last year, the supervisory board members of Shell and Unilever opine the chances of another revolt to be quite high.

Onto the competition, where Victoria has again taken its position in first place. MBA has gained the 22nd place because of their investment in XPO Logistics, Sylvania Platinum, and Galapagos, developers of a new anti-rheumatism drug. Because of a 2.39% change, Merx finished 23rd place. Floryn and Fides Investments were also both placed higher because of their investments in Galapagos, finishing with a 2.35% and 2.98% change respectively. Next Generation finished in 4th place because of their gains on a mix of ETFs. K2 Capital lost their 8th place because of investments in Take-Two Interactive, resulting in a negative 0.52% change.

Written by Sebastian Cornielje