15th November 2003 

UK stock markets once again spent most of the week in an optimistic mood with the FTSE100 index breaking through 4400 four times before finishing at 4397, up 20.1 points on the previous Friday’s close.

Despite signs of a loss of confidence on Monday afternoon when the FTSE100 plunged from an optimistic opening that morning to just below the opening level and dropped still further to fall below 4320 on Tuesday morning, by Thursday there seemed no doubt that around 4400 was where the index was going to stay for the moment. Even heavy profit-taking later on Thursday failed to have a lasting impact, and twice on Friday the index bounced around 4410 with no real sign that anything would dent the underlying conviction of investors and trader that a real recovery is now underway.

Although the best of the week’s gains were seen among the larger pharmaceuticals, most industry sectors showed encouraging rises. Some caution was noticeable in technology sectors with the Techmark index losing heavily on Tuesday and sliding downwards again from Thursday’s high right until Friday’s close, but never really showing any indications of the threat of heavy selling or even coming close to dipping below the 1000 level it broke through again just last month. The FTSE AllShare index closely followed the FTSE100’s lead all week, finishing comfortably up at 2173.5, its highest level for over a year.

Most importantly, the FTSE100 is now more than 33% up on its year’s lows of March, which is an achievement and an expression of confidence that few would have predicted even a few months ago.

The appointment of James Murdoch as CEO at BSkyB primarily because that is what his father, BSkyB Chairman Rupert Murdoch, wanted, has, perhaps, opened a new era in shareholder revolution.

In this case at least, the Chairman got his way and his son’s new position has now been confirmed, but not before angry questions had been asked about whether he was in fact the right man for the job or whether this was a totally inappropriate appointment based on James being nothing more (or less) than the Chairman’s son.

What makes this interesting and possibly unique in recent years, is that the loudest shouts of complaint came not just from disgruntled private shareholders and the sort of groups who claim to represent small shareholders’ interests, but also from the largest institutional shareholders.

Despite the publicity surrounding recent "shareholder revolts" mostly concerning directors’ pay and benefits packages, almost every case has been from small groups who, for one reason or another, have a particular interest, complaint or protest they have been determined to make a lot of fuss about. Invariably, the institutional investors have stayed clear, not least because so much of it really has been fairly frivolous and little of it really likely to have an impact on the long-term performance of the companies involved.

This time, however, the loudest noises at BSkyB’s shareholders’ meeting came not from the groups of smaller shareholders but from Legal & General, from Morley Fund Managers, from the National Association of Pension Funds, from Deutsche Asset Management.. Although their comments were described by journalist Andrew Neil (whose persistent criticism of BSkyB’s management is almost legendary) as "pathetic", they not only turned up (an unusual event in itself) but also asked pertinent questions and demanded real answers.

They got their answers, and went away satisfied even though many others were still unhappy.

What matters is that they took the trouble to ask, and did not content themselves with the usual role (allegedly) assigned to institutional investors of doing nothing more than chatting to the management of the major companies in which they hold shares over expensive lunches. This time, they publicly voiced their concerns.

The cynical will, no doubt, claim that the whole thing was staged; that Murdoch (probably both of them) needed to be seen to be answerable to his company’s shareholders; that "jobs for the boys" (in this case all too literally) is as major a part of big business as it has ever been.

I wonder, though, whether this is perhaps a move in the right direction. I hope that this will not be a one-off; that institutional shareholders do take the time to express their concerns and comments publicly at shareholders’ meetings.

And I hope that company AGMs might one day become more than expressions of trivia and frivolity from minority shareholder groups while the real business has already been decided and agreed between those with real voting power and the companies’ management long before the rest of us are consulted.

I hope. But without much confidence that particular dream might come true.