NEWSLETTER of July 22, 2022

The following content has been added at finexpert:

Morgan Stanley | Oliver Wyman
GLOBAL WEALTH & ASSET MANAGEMENT, 2022 EDITION: TIME TO EVOLVE
Our Wealth and Asset Management Report "Time to Evolve" published this year in cooperation with Morgan Stanley concludes that the wealth management industry is on the cusp of the next stage of evolution, "Wealth Management 3.0". In order to tap into the substantial revenue streams across broader wealth and client segments, wealth managers are being asked to diversify and further modularize their service and operating models. They also need to take full advantage of technological benefits in order to tangibly reduce their service costs. This is the only way to solve the fundamental growth and profitability problems of the industry. >more

State Street Corporation
THE EFFECTS OF ESG ON THE GLOBAL EQUITIES LENDING MARKET
Our recent study examines the effect of ESG on the global equities lending market. By combining equities lending, ESG, and proxy vote data, we quantify the impact ESG has had on lending supply, short-selling demand, and institutional investor engagement. Our findings suggest that ESG considerations are deeply embedded in the securities lending market and are growing in importance. Importantly, the analysis identifies ways in which institutional investors can balance the revenue earned through securities lending with the pursuit of their ESG objectives. >more

PGIM
STOCK-BOND CORRELATION: A GLOBAL PERSPECTIVE
The correlation between stock and bond returns has been reliably and persistently negative for the last two decades across Developed Markets (DM) – matching the US experience. During this regime, stocks and bonds have hedged one another, dampening overall portfolio risk for a given level of equity allocation. Building on earlier work, we now look at stock-bond correlation from a global perspective. We explore DM stock bond correlations, their relationship to each other, and their common macroeconomic drivers, if any. >more

EY
TRENDBAROMETERS IMMOBILIENANLAGEN DER ASSEKURANZ
At 12.1 percent, the real estate ratio of German insurers reached a new high and grew by a further 0.6 percent compared with the previous year. However, insurance companies are somewhat more hesitant in the current environment. It is true that half of the insurance companies would like to further increase their real estate quota. In the previous year, however, two thirds had indicated this. Five percent even want to reduce their real estate ratio at present. The 13-year trend of rising real estate ratios among insurance companies thus appears to be weakening. >more

EY
MIXED LEADERSHIPBAROMETER JULI 2022: ANTEIL WEIBLICHER VORSTANDSMITGLIEDER IN DEUTSCHEN BÖRSENNOTIERTEN UNTERNEHMEN
The proportion of women in the boardrooms of Germany's listed companies continued to rise in the first half of the year: As of July 1, the 160 DAX, MDAX, SDAX and TecDAX companies had a total of 101 female board members, five more than six months ago. The number of female top managers has thus roughly doubled within four years. The 101 women are matched by a total of 614 men on the companies' executive boards. The proportion of women is 14.1 percent - half a year ago it was 13.5 percent. Nevertheless, many executive boards of German corporations remain a male-only domain. Currently, 51 percent of the executive boards of listed companies are exclusively male. There are currently at least two female board members in every ninth company. >more

GATE FEES: THE PERVASIVE EFFECT OF IPO RESTRICTIONS ON CHINESE EQUITY MARKETS
Charles M.C. Lee, Yuanyu Qu, and Tao Shen
2022
From 2007–2020, unlisted Chinese firms paid an average of over US $500 million to listed firms for their shell value in reverse merger transactions. We show that this large shadow price for a public listing sheds light on other features of Chinese markets, including (a) near-zero mortality rates, (b) frequent major-asset restructurings (MARs), (c) insensitivity of small-firm prices to corporate earnings, and (d) a large size effect. A firm-level measure of expected shell probability (ESP) predicts stock returns, MARs, earnings-to-price sensitivity, and short-window returns to IPO-related regulatory news. Furthermore, adding ESP to existing pricing models for Chinese stocks significantly improves model performance. >more

DOES BILATERAL TRUST MATTER DURING M&A NEGOTIATIONS?
Muhammad Farooq Ahmad, Nihat Aktas, and Saqib Aziz
2022
We examine the effect of bilateral trust on cross-border M&As. Using a large European M&A sample, we find that bilateral trust facilitates deal initiation and completion. Bidder and target bilateral trusts towards each other are equally important for deal initiation, but only bidder trust towards the target firm matters for deal completion. Moreover, the role of bilateral trust on deal completion increases in more complex and riskier transactions or with lower cross-border M&A experience. These results support the importance of bilateral trust as deal facilitator in negotiation settings characterized with liability of foreignness, contract incompleteness, and weak regulation. >more