(Spectator Australia) - Should US regulators ban short-selling of bank stocks? That’s a hot topic as investors refuse to accept reassurance from the Fed chairman Jerome Powell that the recent banking crisis-that-wasn’t is over.
Following JPMorgan’s rescue of First Republic, shares in other regional banks such as PacWest in Los Angeles, Western Alliance (Phoenix) and First Horizon (Memphis) have fluctuated wildly and fingers have pointed at short-sellers – who borrow shares they think are about to fall in order to sell, buy back cheaper and pocket a profit.
That’s bad, say critics, in the broad sense that it’s a negative form of investment, the reverse of backing companies you believe in; and much worse if sellers spread false rumours to push shares down. To which defenders retort that most short-sellers are serious analysts rather than cynical manipulators; that short-selling enhances liquidity and ‘price discovery’; and that profiteers who boost shares by spreading fake positive news are at least as wicked but take less flak.
Short-selling was restricted on Wall Street in 2008 and in Europe (where it’s seen as an Anglo-Saxon corruption) after the onset of Covid. But evidence is mixed as to whether banning it calms panicky markets – or whether the act of banning it would merely trigger another outburst of panic.
Stony ground
Deregulation measures proposed by the Financial Conduct Authority for the London Stock Exchange – to make it more attractive to hi-tech companies such as Arm Holdings that currently prefer New York listings – have fallen on stony ground. Writing on Spectator.co.uk, Ross Clark said the changes, which give more power to founder-entrepreneurs, ‘will put investors at greater risk’ – and the FCA itself felt obliged to make the same point. But will a less restrictive regime draw a surge of new City business?
Not, I suspect, unless it also fertilises an uplift in London share values to match what US markets offer. That in turn depends on the mindset of UK investors: more conservative and less tech-savvy than over there – and, however rules may change, unlikely to shift in a hurry.
Candy plague
If you came to London for the coronation, I hope you didn’t buy souvenirs in one of those ‘American candy’ stores that have become a plague on Oxford Street and other tourist boulevards. Westminster Council is calling for criminal investigation into the opaque ownership, business-rate avoidance and counterfeit goods that have been associated with these lurid outlets – though we might ask why, other than in pandemic desperation, council officers allowed so many to open in the first place.
The good news is that HMV is displacing Candy World to return to the flagship site at 363 Oxford Street that it occupied from 1921 (opened by Sir Edward Elgar) to 2019, when the music group collapsed and passed to a Canadian owner. But there’s no hope of the long-gone snuffmaker Fribourg & Treyer returning to its bow-windowed Georgian shop at 34 Haymarket, now candy-colonised as one of the capital’s saddest sights.
No street party
Every day’s a party in Seven Dials, but there was no coronation quiche in my Yorkshire street, not for lack of monarchism but because all five of the family-sized cottages opposite my weekend window, and half a dozen more nearby, are holiday lets, unoccupied more often than not. The hedge-fund titan and Tory donor Crispin Odey says Housing Secretary Michael Gove ‘might as well be a communist’ if he restricts the Airbnb-style letting of second homes, in addition to his assault on buy-to-let landlords – and it’s true that to curtail Airbnb, the Californian flagship of digital disruption that has monetised $180 billion worth of global bedroom space over the past 15 years, would play to recent bleats from the US that the UK is ‘closed for business’. It would also cut the pocket money of thousands of homeowners.
Disruptors are generally welcomed because they broaden consumer choice and break established price mechanisms – but they also cause collateral damage. If a free market in short stays has produced a glut of empty rooms in places where key workers can’t afford to buy or rent, should government – I merely ask – do nothing?
Drab in Dior
Everyone was watching Prince Harry’s body language – and I think I spotted a signal in that dark Dior morning suit he chose to wear. Some pundits wondered whether he and Meghan are chasing a deal with Dior, the fashion house that’s the anchor brand of the French multibillionaire Bernard Arnault’s LVMH group. But I think the prince made himself drab amongst his estranged family’s fabulous display of coronation bling for a more subtle reason.
Don’t look at me, he was saying, look at the array of world-class British craftsmanship around me and ask yourself why there isn’t a UK-based luxury-goods combo to match LVMH – Europe’s most valuable company despite having nothing to do with high technology – or its rival Kering, which owns Yves Saint Laurent, or the Swiss-based Riche-mont, owner of Cartier and Montblanc.
Taking the prince’s cue, imagine the retro export oomph of a group that included the Garter robemaker Ede & Ravenscroft, the Hainsworth mill at Pudsey that weaves guardsmen’s scarlet tunic cloth, and the King’s undershirt-maker Turnbull & Asser – which is actually owned by the Fayed family.
The obstacle, as with microchips and bioscience, is that so many of our high-skilled businesses have already passed to foreign owners or private equity. But surely there’s a patriotic tycoon out there who wants to build a Best of British conglomerate? And – I’m convinced Harry was signalling – surely there’s a job for a jobless Windsor as its chief impact officer and global ambassador?
By Martin Vander Weyer
May 13, 2023
