In Monday’s Financial Times (13th May) there are two stories which, taken together, demonstrate the current failure of our capital markets and their potential to become a force for good.
First the failure (Fingerpointing begins after Uber IPO Misstep). This is illustrated by the telling way in which everyone in the markets is discussing Uber’s IPO. The story is all about the price. Uber’s shares closed 8% down on its offer price. Apparently the ‘inevitable finger-pointing begins over who or what was at fault’.
Who cares? Investors are warned that the price of shares can go up and down. Meanwhile there’s the real economy to worry about and a real community of people who provide, use or compete against Uber and Lyft. One might expect to find some reflective discussion on the consequences of two would-be global operators aggressively disrupting local taxi markets. Will regulators and the public sit idly by? Or will they draw conclusions from the out-of-control behaviour of Facebook and Amazon and decide to curb listed monsters with greedy markets to placate?
This brings us to the second FT story (Volkswagen gears up for AGM showdown). More big investors are belatedly waking up to the realisation, as some institutions like Hermes warned years ago, that VW has had an incestuous governance and an overbearing culture in which no-one in or below the board would stand up to a management when it started to cut corners. Good to know that the stewardship role of investors in challenging a company’s culture is beginning to bite .
In years to come, coverage of every IPO would be accompanied by an in-depth character due diligence; an examination of the leadership and values of the companies and the behavioural, as well as financial, track record of the protagonists. Not tittle tattle about whether the shares went up or down or who got the price wrong by a few points.