NEWSLETTER of December 13, 2024

The following content has been added at finexpert:

Goldman Sachs
MARKET CONCENTRATION: HOW BIG A WORRY?
S&P 500 returns this year have been nothing short of spectacular, with the index rising an eye-popping 26% ytd. This stellar performance owes to a handful of technology stocks — the Magnificent 7 — which returned 41% ytd and accounted for an astonishing 47% of the index’s gains. Just how anomalous US equity market concentration is today, and how worried investors should be about it, is Top of Mind. >more

KPMG
STEPPING BOLDLY INTO A NEW DECADE: EUROPEAN BANKING SUPERVISION AT TEN
November 2024 is the tenth anniversary of European banking supervision. Set up in response to the global financial crisis and subsequent Eurozone sovereign crisis, the Single Supervisory Mechanism (SSM) is a key pillar of the EU Banking Union. At the centre of the SSM, the European Central Bank (ECB) began direct supervision of the largest and most complex European banks – known as ‘Significant Institutions' – in November 2014. To mark the anniversary, KPMG and the Association of German Banksopens in a new tab (Bundesverband deutscher Banken, BdB) have published a joint paper assessing the SSM’s record and offering recommendations for the future. The paper is informed by the results of a survey of ECB-supervised banks conducted by KPMG, the BdB and the Centre for Financial Studies at the Goethe University, Frankfurtopens in a new tab (CFS). >more

Leibniz-Institut für Wirtschaftsforschung Halle (IWH)
IWH-INSOLVENZTREND: ZAHL DER FIRMENPLEITEN IM NOVEMBER LEICHT RÜCKLÄUFIG
According to an analysis published today by the Leibniz Institute for Economic Research Halle (IWH), the number of insolvencies of partnerships and corporations in Germany fell back below the October peak in November. Initial early indicators point to a renewed rise from February. >more

BCG
SOVEREIGN WEALTH FUNDS AND PUBLIC PENSION FUNDS ARE RESHAPING PRIVATE MARKETS
Principal investors play a critical role in the investment world. Evolving expectations, a shifting interest rate environment, and the need to manage increasingly large asset bases for both performance and impact are transforming how and where these investors allocate capital. As principal investors assume a more prominent role in the investment landscape and in society more broadly, their relationships with the general partners (GPs) that manage much of their capital are also being reshaped. To succeed in this new environment, principal investors and GPs must recognize the influence of current market trends and adapt to the shifting dynamics that drive investment strategies across asset classes. >more

CARBON BURDEN
Lubos Pastor, Robert F. Stambaugh, and Lucian A. Taylor
2024
We quantify the U.S. corporate sector's carbon externality by computing the sector's "carbon burden"---the present value of social costs of its future carbon emissions. Our baseline estimate of the carbon burden is 131% of total corporate equity value. Among individual firms, 77% have carbon burdens exceeding their market capitalizations, as do 13% of firms even with indirect emissions omitted. The 30 largest emitters account for all the decarbonization of U.S. corporations predicted by 2050. Predicted emission reductions, and even firms' targets, fall short of the Paris Agreement. Firms' emissions are predictable by past emissions, investment, climate score, and book-to-market. >more

LEARNING BY INVESTING: ENTREPRENEURIAL SPILLOVERS FROM VENTURE CAPITAL
Josh Lerner, Jinlin Li, and Tong Liu
2023
This paper studies how investing in venture capital (VC) affects the entrepreneurial outcomes of individual limited partners (LPs). Using comprehensive administrative data on entrepreneurial activities and VC fundraising and investments in China, we find that after investing in a successfully launched VC fund, individual LPs create significantly more ventures than do LPs in funds that failed to launch. These new ventures tend to be high-tech firms with better survival rates and more patent activity. Our results suggest that venture investments are a channel through which individual LPs learn. >more