TheChek News Flow

Stock exchange starts public consultation on the publicly listed shell companies that seek to invest in—and merge with—private companies

Singapore is trying to get a piece of the red-hot market for blank-check companies.

Singapore Exchange Ltd. S68 0.20% started on Wednesday a four-week public consultation on special-purpose acquisition companies. These are publicly listed shell companies with ready pools of cash that seek to invest in—and merge with—private companies.

The vehicles have taken Wall Street by storm since last year, and with SPACs not permitted on most Asian stock exchanges, investors and companies in the region have instead tapped into the U.S. boom. Magnates including Hong Kong billionaire Li Ka-shing and Chinese rainmakers Fred Hu and Fang Fenglei have raised their own SPACs this year.

Grab Holdings Inc. a Southeast Asian ride-hailing giant, is in talks to go public via a U.S.-listed SPAC in a deal that could value that company at $40 billion, The Wall Street Journal reported.

“We have received inquiries from potential sponsors and market professionals on whether SGX would consider allowing SPACs,” said Tan Boon Gin, chief executive of Singapore Exchange Regulation, the exchange’s regulatory body. In a SPAC, a sponsor refers to the management team of the shell company that is given the task of finding another company, also known as a target, to merge with.

“The feedback is that an Asian SPAC would be of interest to investors and sponsors because it would be in the same time zone as the Asian targets, which themselves may also be more familiar to the investors here,” Mr. Tan said in a media briefing.

SPACs seeking listings in Singapore would be required to have a minimum market capitalization of 300 million Singapore dollars, or the equivalent of about US$223 million, and would have three years to complete a merger, according to the proposed framework. The exchange is seeking public feedback until April 28.

The market-cap threshold is considerably higher than in the U.S., where the floor for listing on boards run by the Nasdaq Stock Market and the New York Stock Exchange varies from $50 million to $100 million.

Mr. Tan said the higher market-cap requirement is intended to attract quality investors. “What we’re looking for really is a sponsor with a proven, established track record in acquiring, managing and operating growth companies,” he said.

Promoted as a fast and relatively hassle-free route to public markets, SPACs have stolen the thunder of initial public offerings. This year, 297 SPACs have listed in the U.S., raising a total of $97.2 billion, surpassing the whole of 2020, when 248 SPACs listed with $83.4 billion in total proceeds, according to data from SPAC Research.

Other markets are also reacting to the U.S. boom. The Hong Kong government has asked the city’s securities regulator and exchange operator to explore listing programs, and the U.K. government is proposing changes to make its SPAC program more attractive to investors and companies.

The Singapore Exchange aims to introduce the SPAC framework by midyear and expects to have its first listing around then, Mr. Tan said. In 2010, it also consulted about allowing SPACs but didn’t proceed because market conditions weren’t ripe he said, without elaborating.

The exchange made several proposals that are meant to protect investors during the merger process. For example, shareholders would get as much information ahead of the deal as they would get in an IPO prospectus, and the resulting company would have to follow standard listing rules. In addition, only independent shareholders could vote on mergers, to limit the influence of sponsors.

Elsewhere in Asia, South Korea and Malaysia allow SPAC listings. But the market response has been tepid. No SPAC was issued in South Korea last year, while in Malaysia the last SPAC listing was in 2014, according to Dealogic data.

Study didn’t find any major safety issues with the shot, which could be up for regulatory authorization in coming weeks

The Covid-19 vaccine from Pfizer Inc. PFE -1.39% and BioNTech BNTX 8.89% SE safely protects kids 12 years and older, the companies said, results likely to lead to inoculating the children before the next school year.

The vaccine was 100% effective in protecting against symptomatic disease in a study of more than 2,200 children, the companies said Wednesday.

Researchers also didn’t find any safety concerns, Pfizer and BioNTech said.

Given the results, Pfizer said it would ask U.S. health regulators in the coming weeks to expand use of the shots to 12- to 15-year-olds.

The timetable for authorization in the U.S. could mean the children will be able to be vaccinated before the next school year begins in the fall.

The companies said they would seek clearance in other countries, too, but didn’t give a timetable.

The vaccine, which Pfizer developed with BioNTech, was authorized for use in people 16 years and older in the U.S. last December, after a pivotal trial in 44,000 subjects.

Pfizer last week started testing the vaccine in children ages 6 months to 11 years.

“We share the urgency to expand the authorization of our vaccine to use in younger populations and are encouraged by the clinical trial data from adolescents between the ages of 12 and 15,” said Pfizer Chief Executive Albert Bourla.

Covid-19 vaccination efforts in the U.S. and overseas have focused on protecting older adults who are at higher risk of severe disease caused by the coronavirus.

Children are at lower risk of contracting the coronavirus than adults. When they are infected, they tend to experience milder symptoms. Some can get seriously ill, however, and some can also spread the virus.

Health authorities say it will be important to vaccinate children, not only to protect them from the virus but also to help reach the communitywide immunity needed to move past the pandemic.

Children make up about 13% of Covid-19 cases in the U.S., according to the American Academy of Pediatrics.

The Pfizer-BioNTech vaccine is given in two doses three weeks apart. It is among three Covid-19 shots authorized for use in the U.S., along with ones from Moderna Inc. and Johnson & Johnson.

The vaccines from Moderna and Johnson & Johnson are authorized in the U.S. for use in adults 18 years and older. Moderna also is testing its vaccine in 12- to 15-year-olds and said its trial is fully enrolled.

In the study of younger adolescents, 1,131 of the subjects received the Pfizer-BioNTech vaccine, while the rest got a placebo. The volunteers who got the vaccine received the same dose that older people get.

Researchers found the shot to be 100% effective after observing 18 cases of Covid-19 in children who had received a placebo, compared with no cases in the group that got vaccinated, Pfizer said. Researchers didn’t see any severe cases, deaths or hospitalizations, the company also said.

Researchers also said an unspecified number of vaccinated children had more neutralizing antibodies a month after receiving their second dose than subjects 16 to 25 years of age had in the vaccine’s pivotal trial.

Neutralizing antibodies prevent the virus from entering cells and replicating and play an important part of the immune system’s defense against viruses.

Children in the study reported side effects like fatigue and headaches that were consistent with those reported by young adults in the vaccine’s larger pivotal trial, Pfizer said.

To further study the safety of the vaccine, researchers plan to follow the child subjects for two years after their second dose, according to Pfizer.

Three troubling situations involving huge clients suggest the Swiss bank has a risk-management problem

Banking by definition involves risk. If you lend money to people and companies, some of them won’t be able to pay it back. The difference between a good bank and a bad one lies in how it manages that risk.

Bankers who are too cautious starve the economy of funds needed to fuel trading and growth — and they don’t make profits. Those who throw money at the wrong people at the wrong time can end up in big trouble.

That brings us to Credit Suisse. This month, Switzerland’s second-largest bank became badly entangled in the collapse of the finance group Greensill Capital. Now it looks to be the biggest loser from the spectacular blow up of Archegos Capital Management. Credit Suisse shares have dropped some 16 per cent since it disclosed on Monday that its losses could be “highly significant.”

So much for chief executive Thomas Gottstein’s vow to start 2021 with a “clean slate” after the bank was rocked by a series of scandals in 2020, including one surrounding former client Luckin Coffee, which was embroiled in fraud.

To be fair, several big banks were caught out by Archegos. Even though founder Bill Hwang’s Tiger Asia Management hedge fund pleaded guilty to wire fraud in 2012, investment banks still competed to extend Archegos more than $50bn in credit, which it used to build up huge, nonpublic positions in a small number of stocks.

When the prices of some of those companies started to fall, the banks scrambled to unwind their positions. Nomura and Credit Suisse appear to have taken the worst of the damage. The Japanese bank has admitted to a $2bn claim and the Financial Times has reported that Credit Suisse’s losses are in the $3bn to $4bn range, far more than anyone else has revealed.

Yet there is a common thread running through Credit Suisse’s recent debacles: highly concentrated exposure to an individual client or company, or both. We are still learning the details about Archegos, but the bank must have allowed it to rack up huge positions to lose that much that quickly.

Before Luckin Coffee filed for bankruptcy, Credit Suisse described its chief executive as a “dream client” for a relationship that spanned private banking, loans and its share offering. Similarly, with Lex Greensill the bank was exposed in at least three ways: he was a private banking client, the group got a $140m bridge loan last year and, most damaging, Credit Suisse’s asset management division is having to wind down $10bn in supply chain finance funds that sourced assets from Greensill.

Insiders argue that the trifecta is due to long-lasting cultural and structural problems that have been exacerbated by recent efforts to jazz up results. Last year, Credit Suisse’s return on tangible equity was 6.6 per cent, barely half that of UBS and US rivals. Gottstein told investors in December that he would seek to boost that to 10 to 12 per cent. But the bank’s shares traded at a substantial discount to European peers, even before this week’s fall.

Most big global banks run on matrix models: businesses are divided into functional groups and also have regional reporting lines. Credit Suisse has repeatedly tinkered with its structures, most recently in July when Gottstein rolled back changes made by his predecessor. In addition, Swiss and Asian businesses are run separately from the functional divisions. “Everything is siloed in this byzantine arrangement. They call it experimental. I call it chaotic,” says one senior banker.

The bank has struggled to keep on top of big clients who deal with several different businesses at once. The July reorganisation sought to address this by combining risk and compliance, and creating a committee to look specifically at these big clients. But the changes were also described as having “significant efficiency potential” and cost savings. If they improved risk management, the benefits are not obvious so far.

The lack of a holistic view and pressure to boost revenues has led front-line managers to focus on getting specific transactions approved, rather than asking if the bank should be doing so much business with a particular client. Insiders also complain that post-Greensill personnel changes to asset management involve little fresh blood: the new head is returning to the bank from UBS and his predecessor has simply been moved to another area.

Finma, the Swiss regulator, was already concerned enough by Greensill to require the bank to have additional capital for unexpected risks. But that cannot be the only response. Credit Suisse will never be risk free. What Gottstein needs to do is make sure the risks the bank runs are the right ones.

DAX:

MDAX:

SDAX:

What makes an iconic painting? The National Gallery’s top 12 works

A list of the museum’s most viewed pictures during the past year reveals that at times of crisis we seek art of feeling

A year after UK museums moved more or less online, what art do we especially want or like? The National Gallery’s chart-toppers for the year’s most viewed pictures — from lockdown in March 2020 until now, determined by the number of page-views on the gallery’s website — are varied and epoch-ranging. The top dozen (of a list of 20) happen, marvellously, to encompass art’s history: from Van Eyck’s pioneering oil paint realism in 1434 to Monet anticipating abstraction in 1899. Yet the selection is intriguingly far from representing the scope of Trafalgar Square’s 2,300-work collection. Rather, it is revelatory of 2020-21’s moment of artistic taste and need, and of audience preferences, which museums could bear in mind as they reopen and plan their futures.

The people’s choices have certitude. They are strongly composed, sharply defined, brilliantly coloured images: Titian’s ultramarine sky, Van Gogh’s yellow of happiness, the stately green backdrop of “The Ambassadors”. They are also peaceful, domestic and, Turner’s elegiac “The Fighting Temeraire” apart, optimistic. The only mock-fierce note is Rousseau playing tigers: “Surprised!”’s big cat, modelled on an animal in Paris’s zoo, transposed among surreally enlarged houseplants. Nothing in this list is threatening or even exotic: landscapes are local — the Thames, Suffolk — and extend no further than a Normandy garden.

What we crave is wellbeing in familiar nature. Is there a more crystalline painted example than brightness at noon in “The Hay Wain”? Yet the first British audiences ignored it; only at the 1824 Paris Salon, Constable recorded, did French painters raise the “alarum in my favour”, acknowledging “the richness of texture, and attention to the surface of things”.

The surface of things is a basic joy of painting, and reproduces well in close-up on screen: the dabbed-on bristling seed-heads and hairy sepals in “Sunflowers”; the lynx fur and pink silk Holbein gives envoy Jean de Dinteville; light entering through a window, catching polished brass chandelier, silvered mirror, so convincingly that we feel, as the painter signed “The Arnolfini Portrait”, that “Jan van Eyck was here”. Perhaps intense painterly presence is a reason why interiors and still lifes (“The Ambassadors”, with its ornamental carpet, globe, lute, is both) take the top slots.

National Gallery director Gabriele Finaldi says of these “indoor scenes with very dressed-up people” that “I am wondering whether they reflect our own experience of being enclosed in our homes during lockdown but yearning to go out and celebrate”. TV presenters Ant and Dec, posed as merchant Arnolfini and his wife in a hilarious bathrobe Instagram recreation, spurred interest in the Van Eyck. But a mood of secular comfort and solid naturalism dominates the list: unable to go out, we brought home the real world.

Only one of the top 12 is religious in subject — compared with a third of National Gallery paintings — and it too is a comforting harmonious image of refuge: Leonardo’s “Virgin” secluded in a grotto with infants Jesus and Saint John the Baptist. The babies consider each another as they are watched over by one of the most beautiful, diaphanous angels in art. Auden’s evocation of museum art in “Musée des Beaux Arts” — “About suffering they were never wrong/The old Masters” — strikes no chord with this list.

Classical narratives here are romantic comedies. Botticelli reverses the sexist order with a clothed Venus and a languid reclining male nude, post-coitally drowsy, sleeping through a conch shell blasting in his ear. Too excited to be decorous, Titian’s Bacchus leaps from a cheetah-drawn chariot as Ariadne pirouettes towards him, the dance-like turn accentuated by her swirling scarf: love at first sight is touching, awkward, absurd, true. All the list’s figure paintings are about relationships, often delineated through exchanged gazes. There are no solo portraits — human connection, not introspection, is the thread. Even Velázquez’s nude stunner “The Rokeby Venus” is attended by a plump innocuous Cupid, in a game of mirrors that is also about how we, the viewers, look.

What makes an iconic picture? Virtuosity matters — Velázquez’s control of a single, black-edged brushstroke tracing a line beneath the opalescent body from mid-back to calf; Turner’s freedom of swirls, slashes, sprays in the blurred rush of “Rain, Steam, and Speed” — but the alchemy remains mysterious. Of his “Bigger Splash”, David Hockney said: “It’s a memorable picture but you don’t know you’re doing them because there’s no formula. If there was a formula there’d be a lot more memorable pictures.”

We each have our musée imaginaire; this list carries weight as a collective one. It breaks rules of political correctness — exclusively white dead male European painters — yet is irrefutable: as former National Gallery director Charles Saumarez Smith said ahead of this week’s publication of his book The Art Museum in Modern Times, “the greatest works of western European art remain the touchstones of public experience of art”. For museums, the challenge of the 2020s is to redress under-representation — the Rijksmuseum has just, for the first time, moved paintings by women into its “Gallery of Honour” alongside Rembrandt and Vermeer; seven solo shows for women, two for men, are scheduled for 2021 at Tate Britain and Modern — without sacrificing prominence of the greats who, as this list celebrates, remain beloved and meaningful for audiences.

None of these dozen pictures is directly political, yet many mark social turmoil: Turner’s “The Fighting Temeraire” lamenting the age of sail, Holbein’s broken lute string, maths book open at “division”, skull streaked across the floor, implying Reformation Europe’s tensions. These things are not narrated but felt: every work here is infused with emotion about its subject.

“To get up enough heat to melt those golds . . . it’s not everyone that can do it, it takes the energy and concentration of a person’s whole being,” Van Gogh said of his bud-to-wilting, life-to-death “Sunflowers”. The effect of that expressiveness still drives much of our response to art. The chronological gap in this list — nothing between Velázquez, last of the Old Masters, in 1647, and Constable in 1821 — is a snub to rationalism and the Enlightenment: at crisis times, we seek art of feeling.