A notable name of the London Stock Exchange’s fresh 27-strong list of suspended stocks was PhosAgro, the giant fertiliser group backed by Russia billionaire businessman Andrei Guriev, the reported owner of Witanhurst, London’s second largest home after Buckingham Palace.
PhosAgro is chaired by none other than Xavier Rolet, the LSE’s long-serving chief executive until late 2017. He got the Russian gig a few months after stepping down. We are yet to hear from Rolet on whether he intends to stay in post at PhosAgro, but the general pan-European advice from fellow directors seems clear: it’s time to get off Russian boards.
Rolet is French, so here’s the version of a coordinated campaigning message from the European Confederation of Directors’ Associations: “Board members should question their mandates in Russian and Belarusian companies.” The UK’s Institute of Directors weighed in for its audience here: “Although directors owe legal duties to the companies on whose boards they serve, they should also feel a stronger moral duty to uphold the fundamental values of freedom and democracy.”
That line could almost have been written with Lord Barker in mind. The Conservative peer and former minister remains the well-remunerated executive chair at EN+, the Russian aluminium firm whose owners include the oligarch Oleg Deripaska. That is despite calls from Ben Wallace, the defence secretary, for him to resign.
Barker’s view is that, “whatever the optics”, he has duties to the company’s workforce, including several thousand in Ukraine, and he will not “shirk that responsibility”. It’s a point of view, but there’s no getting away from the fact that he’s sitting atop a large and important Russian company. The IoD’s view is the one to prefer: “It is no longer tenable for British directors to be involved in governance roles in the Russian economy.” This stuff should not be complicated.
Exit points to gap in the market for an alternative benchmark
Meanwhile, say goodbye from the FTSE 100 index to Evraz and Polymetal – not because the Russian duo are on the LSE’s expanded list of suspended stocks, but for the humdrum reason that their share prices have crashed so severely that they don’t make the cut on market capitalisation grounds.
Both Evraz, the steel and mining business where Roman Abramovich is the biggest shareholder, and Polymetal have plunged in value by more than 80% since Russia invaded Ukraine. How, you may wonder, were they members of London’s blue-chip index in the first place? The answer, of course, is that FTSE 100 reflects nothing other than itself.
If a company has a premium listing in London and has a free float in its shares of 25% (or 50% if non-UK incorporated), and ticks the governance boxes, it’s eligible for inclusion. Then it’s a matter of pure stock market size.
It is on this basis that the index also includes names with few direct links to the UK such as Fresnillo (a Mexican silver miner), Antofagasta (a Chile-focused copper miner majority-owned by a local billionaire’s family) and the Swiss-incorporated Coca-Cola Hellenic Bottling Company. The LSE’s open-doors policy on listings has always been wider than Russia.
There’s surely a gap in the market for an alternative benchmark that is purer assembly of large UK companies. Dominance by banks, insurers and oil companies would generate even more grumbles about “dinosaur” hasbeens that are obsessed with paying dividends. But such exposures are what many private investors want from a low-cost tracker fund.
Not risk free but there should be room for UK-focused streamer
“Our ambitions in the streaming world are not world domination,” declared Carolyn McCall, chief executive of ITV. Thank goodness for that, shareholders may feel. Even a plan to be a national streaming champion sent the share price crashing by 27%, which equates to more than £1bn of stock market value.
Was the plan such a shocker? Not really. ITV will have to ramp up spending on programming by £160m next year as it launches ITVX, the new streaming service, which probably implies a couple of years of going backwards in terms of profits. But the alternative was a counsel of despair – just let Netflix, Disney, Amazon mop up every last digital pound in the UK.
ITV still has to demonstrate that it can achieve McCall’s target of at least double-digital revenues to £750m by 2026, but it’s not as if Coronation Street and other advertising home-bankers are about to disappear from linear-viewed screens. A “digital first” approach is not risk-free but there really ought to be room for a UK-focused streaming service to duck and weave between globally designed US output.
