NEWSLETTER of February 17, 2023

The following content has been added at finexpert:

Deutsche Bank Research
DEUTSCHLAND-MONITOR BAUFINANZIERUNG Q1/2023
Due to improved leading indicators, extensive fiscal packages and the still robust labor market, we now expect a mild recession in Germany in the winter half of 2022/23. After -1% in 2023, we expect GDP to grow by around 1% in 2024. Base effects in energy and commodities are likely to push inflation down a little further, but they could keep second-round effects above the ECB's target of 2%. We expect annual average inflation of around 7% in 2023 and close to 4% in 2024. Residential property prices rose by 4.9% in Q3 2022 compared with Q3 2021. This probably already implies falling prices for the last few months. For year-end 2023, we expect 5-10 year mortgage rates to rise to 3.6%. With interest rates still somewhat higher in the course of the year, the affordability of residential property in Germany is likely to weaken further. >more

KPMG
PULSE OF FINTECH: H2 2022
2022 was a challenging year for fintech investment globally — with the Americas in particular seeing a $40 billion drop in investment compared to 2021’s high. The decline in deal value doesn’t tell the full story, however. Deal volume was incredibly robust this year: the second highest total next to 2021. Seed deals saw record investment, which bodes well for the long-term fintech pipeline. At a sector level, regtech investment soared to a new high, while geographically, the Asia-Pacific region also hit a new peak — if by a much narrower margin. >more

Lazard
SECONDARY MARKET REPORT 2022
The secondary market delivered a second consecutive year of estimated volumes in excess of $100B in 2022, continuing to prove itself as a highly relevant part of the private capital markets irrespective of the macroeconomic environment. Supporting this statement are a number of key findings from our survey of 2022, which include: GP-led transactions comprised ~43% of the secondary market in 2022, with continuation funds (~75% of the GP-led market) now firmly established alongside IPOs and M&A as a route to liquidity for GPs. LP-led volumes landed at close to ~$60B in 2022, with 500+ transactions completed in this arena, driven predominately by the desire from selling LPs to accelerate liquidity and the denominator effect. >more

Aurum
HEDGE FUND INDUSTRY PERFORMANCE DEEP DIVE – FULL YEAR 2022
The hedge fund industry was down 2.4% in 2022. Global equities and global bonds have fallen 20.0% and 16.7% respectively. It has been an extremely challenging year from both a markets and geopolitical perspective. If one were to sum up 2022 in two words, they could be: ‘extreme moves’. Five-year performance for hedge funds now stands at a CAR of +4.2%, comfortably outperforming bonds (-2.0%) and marginally outperforming equities (+3.0%). Multi-strategy and quant funds were the top performers in 2022; up 9.5% and 8.5% respectively. Long biased and Equity l/s delivered the worst returns; losing 13.2% and 9.6% respectively. >more

"I JUST LIKE THE STOCK": THE ROLE OF REDDIT SENTIMENT IN THE GAMESTOP SHARE RALLY
Suwan (Cheng) Long, Brian M. Lucey, Larisa Yarovaya, and Ying Xie
2022
This paper investigates the role played by the social media platform Reddit in the events around the GameStop(GME) share rally in early 2021. In particular, we analyse the impact of discussions on the r/WallStreetBets subreddit on the price dynamics of the American online retailer GameStop. We customise a sentiment analysis dictionary for Reddit platform users based on the VADER sentiment analysis package and perform textual analysis on 10.8 million comments. The analysis of the relationships between Reddit sentiments and 1-minute, 5-minute, 10-minute, and 30-minute GameStop returns contribute to the growing body of literature on 'meme stocks' and the impact of discussions on investment forums on intraday stock price movements. >more

SOVEREIGN WEALTH FUNDS AND COST OF DEBT: EVIDENCE FROM SYNDICATED LOANS
Ruiyuan (Ryan) Chen, Feiyu Liu, and Yijia (Eddie) Zhao
2023
We examine how sovereign wealth fund (SWF) investments affect target firms’ cost of debt. Using a large sample across 39 countries from 2004 to 2019, and applying a difference-in-differences (DiD) approach, we find that the loan spread of target firms decreases after equity investment by SWFs. This result holds when we use alternative specifications, and address endogeneity issues. Moreover, the negative effect is more pronounced for borrowing firms with higher risk. We also show that SWFs help reduce the cost of debt when they have a strong relationship with the lead banks. >more