The world’s second-largest asset manager has warned investors that US regulators might start limiting the size of the stakes it takes in target companies, saying the cap could push up costs and risks, the Financial Times reports. Vanguard has AUM of c. USD 9.3 tn.

What ownership limits? The US has “long-standing but rarely enforced [10%] caps on individual bank and utility stock ownership … that normally trigger additional responsibilities,” the salmon-colored paper notes, “as long as they do not seek a management role.”

Vanguard apparently doesn’t want those extra responsibilities — if the regulator will even give it a waiver. Vanguard doesn’t want the extra expense and mental overhead, and regulators are under pressure from the left and the right to curb the influence of large passive investors such as Vanguard, BlackRock, and State Street Global Advisors, the paper warns.

What Vanguard is saying: “It is not always possible to secure relief, and there is an increasing amount of uncertainty around how much ownership limitations relief regulators will grant to asset managers like Vanguard,” it said. The fresh risks “make clear the potential negative consequences a loss of regulatory relief could have on fund expenses and performance as well as the potential tax consequences for investors,” it said. Vanguard said it was working with policymakers “to answer questions, address concerns and minimize these risks.”

MEANWHILE- Major US and European benchmarks had good days on Friday, just 24 hours after Wall Street posted one of its worst days since 2022 amid a big sell-down of tech stocks as investors worry the hype over AI might be overblown.

EGX30

29,091

-0.4% (YTD: +16.9%)

USD (CBE)

Buy 48.29

Sell 48.42

USD (CIB)

Buy 48.29

Sell 48.39

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

12,026

-0.6% (YTD: +0.5%)

ADX

9,318

+0.2% (YTD: -2.7%)

DFM

4,280

+1.0% (YTD: +5.4%)

S&P 500

5,459

+1.1% (YTD: +14.5%)

FTSE 100

8,286

+1.2% (YTD: +7.1%)

Euro Stoxx 50

4,863

+1.1% (YTD: +7.5%)

Brent crude

USD 81.13

-1.5%

Natural gas (Nymex)

USD 2.01

-1.7%

Gold

USD 2,428

+1.2%

BTC

USD 67,743

+0.6% (YTD: +58.3%)

THE CLOSING BELL-

The EGX30 fell 0.4% at Wednesday’s close on turnover of EGP 3.8 bn (3% below the 90-day average). Local investors were the sole net sellers. The index is up 16.9% YTD.

In the green: Eastern Company (+3.2%), Juhayna (+1.6%), and Qalaa Holdings (+1.4%).

In the red: Orascom Development (-4.3%), GB Corp (-3.0%), and e-Finance (-2.6%).

Tags: