Stock Market Dramas: Lessons Learned from Fortis, SNS Reaal, Ahold and Shell – ANP News Update

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NOS Nieuws•vandaag, 12:46

• Ruben Eg

  economics editor

• Ruben Eg

  economics editor

In recent years, those who wanted to earn some extra quickly looked at the rising prices on the stock exchange and high profit distributions from companies. More and more people moved some savings to the stock market. And pension participants benefited from the returns their pension fund earned through investments.

The euphoria at the stock market is not new, nor is the chance that the party will sooner or later be rudely disrupted by a crisis. This is evident from the history of the VEB, the Association of Securities Owners, which is celebrating its 100th anniversary today.

One in eight private investors, more than 120,000 households, runs a high risk of running into financial problems if the mood on the stock exchange or housing market changes, the Netherlands Authority for the Financial Markets (AFM) recently calculated. This is reminiscent of the stock market crises of 1987, 2008 and 2010, when many investing households bailed.

The reasons for the dramas vary. Sometimes the economy collapses due to a military conflict or terrorist attack, other times companies themselves undermine the stock market. I wish I had paid close attention, is what angry investors often hear.

Nothing to be done about it

“Investing is by definition taking risks,” says VEB director Gerben Everts. “But yes, sometimes companies pretend that things are going very well and that turns out not to be the case. There is no way to prevent that.”

The VEB has experienced quite a few investment dramas over the years. Well-known are Worldonline (2000), the accounting affair at Ahold in 2003, Shell’s low oil reserves (2004), the ABN Amro debacle with Fortis (2008) and the poisoned real estate of SNS Reaal (2013).

The outside world had a clear opinion about the misery: shareholders are co-owners and therefore partly responsible. Anyone who has spent years uncritically applauding the management and profits should not cry crocodile tears afterwards.

Furious investors at stock market dramas Fortis, SNS Reaal, Ahold and Shell:

Retrospective: dramas among private shareholders

Everts responds that investors know very well that there are risks with the shares they buy. “You look at all the documents and figures and hope that the investment will pay off. But what happened at Ahold, Shell and SNS Reaal, shareholders had no way of knowing.”

Rights as an investor

One in five Dutch people is now actively investing, the regulator AFM reported at the end of last year. The low savings interest rate and high inflation pushed many private individuals to the stock market. It is unclear who got in due to the persistent records on the stock exchange and who looked carefully at the chances of a decline in profits.

A shareholder has voting rights and may put items on the agenda at meetings, but that is not always easy, says stock analyst Jim Tehupuring of 1Vermogensbeheer. “You often have to represent at least 3 percent of the shares. That is difficult at a company like Ahold Delhaize, which is worth almost 30 billion euros on the stock exchange. As a private individual with a few shares, you have no say.”

Together or alone?

The fact is that with every stock market drama, the rules on the stock exchange increased and became stricter. Everts points to the period in which the VEB was founded. “After the First World War, people were made enthusiastic to invest in European bonds and railways. But suddenly German bonds became worthless due to hyperinflation and communist Russia no longer paid back investors in railways. Then rules had to be introduced to protect investors to protect.”

The VEB claims to be the only interest group for private investors in Europe, but in recent years there have been more examples of investors working together. For example, as Follow This, Mark van Baal collects investor money to, as a major shareholder, encourage energy giants such as Shell and ExxonMobil to become more sustainable.

Other climate activists are again trying to steer a meeting their way with one share. This leads to large investors wanting to silence small shareholders after various incidents.

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Other collective investor actions emerged on Twitter and Reddit. Under the campaign name WallStreetBets, private individuals stepped out of idealism and because of the opportunity to make quick money in ailing stock market funds, such as games seller GameStop, cinema chain AMC and even the price of silver.

In recent years, the VEB has also presented itself as a claim party. “If something goes wrong, investors should be able to turn to one party. The VEB can start a collective case for them for compensation,” Everts refers to regular compensation payments at Ahold, Shell and Fortis. One thing is important: “In the event of compensation, the company must be able to continue, so that there is a future for the company and shareholders.”

2024-03-08 11:46:39
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