NEWSLETTER of July 7, 2023

The following content has been added at finexpert:

Amundi
CROSS ASSET INVESTMENT STRATEGY – SPECIAL EDITION: MID-YEAR OUTLOOK 2023
The lagging effects of tightening in the real economy will lead to a further deceleration in growth with divergences: a mild US recession, anaemic growth in Europe and more resilience in emerging markets. Inflation is trending lower, but the speed of adjustment is slow as core inflation remains sticky and stubborn. Evidence from past episodes of high US inflation suggests it will take about two years to bring core inflation down by half from its peak level. We believe that Fed and ECB rates are close to their cyclical peak and do not expect any cuts for the remainder of 2023, as inflation remains above central banks’ targets and the slowdown is pushed back towards year-end. >more

EY
GLOBAL IPO TRENDS Q2 2023
While the number of IPOs remained flat, the Americas region saw an increase in proceeds of 86%, raising $US9.1b, YOY. This growth was primarily attributed to a single mega spin-off IPO, which happened to be the largest US IPO since November 2021. EMEIA IPO activity has continued to shrink, with 167 listings raising US$12.4b YTD, a 12% and 50% decline respectively YOY. Despite this, the region kept its position as the second largest IPO market with 27% of all IPO deals, and the second biggest IPO at US$2.5b. In the year to date (YTD), the Asia-Pacific IPO market has maintained its position as the global leader in IPO volume and value, with an approximate 60% share. Of the top 10 global IPOs, half were from Mainland China and one was from Japan. >more

PwC
EMISSIONSMARKT DEUTSCHLAND: IPOS BLEIBEN AUS – AUSBLICK AUF ZWEITES HALBJAHR POSITIVER
In terms of IPOs, the second quarter was a disappointment: The Frankfurt Stock Exchange did not register a single Initial Public Offering (IPO).  In terms of issue volume, the first half of 2023 recorded the weakest start to a year since 2023, which was dominated by Corona. Debt issuance offers a ray of hope: Both the issuance volume and the number of issues for investment grade bonds recovered significantly in the first half of 2023 compared with the previous year. >more

Alvarez & Marsal
SHAREHOLDER ACTIVISM IN EUROPE: 2023 INTERIM OUTLOOK
Our latest A&M Activist Alert ("AAA") Interim Outlook reviews shareholder activism in Europe in 2023, and predicts how such activism will evolve over the rest of the year and into 2024. As part of our analysis and predictions we have identified 143 European corporates that we consider are at heightened risk of shareholder activist campaigns over the next 18 months. Now in its sixth year, the "AAA" is the most comprehensive forecasting tool of its kind. Based on statistically robust analysis it has successfully predicted ~50% of public activist campaigns over the past five years. It focuses on the major European markets of the UK, Germany, France, Scandinavia, Switzerland, Benelux, Italy and Spain. >more

MONETARY TIGHTENING AND U.S. BANK FRAGILITY IN 2023: MARK-TO-MARKET LOSSES AND UNINSURED DEPOSITOR RUNS?
Erica Xuewei Jiang, Gregor Matvos, Tomasz Piskorski, and Amit Seru
2023
We analyze U.S. banks’ asset exposure to a recent rise in the interest rates with implications for financial stability. The U.S. banking system’s market value of assets is $2.2 trillion lower than suggested by their book value of assets accounting for loan portfolios held to maturity. Marked-to-market bank assets have declined by an average of 10% across all the banks, with the bottom 5th percentile experiencing a decline of 20%. Most of these asset declines were not hedged by banks with use of interest rate derivatives. We illustrate in a simple model that uninsured leverage (i.e., Uninsured Debt/Assets) is the key to understanding whether these losses would lead to some banks in the U.S. becoming insolvent-- unlike insured depositors, uninsured depositors stand to lose a part of their deposits if the bank fails, potentially giving them incentives to run. We show that a bank’s survival depends on the market beliefs about the share of uninsured depositors who will withdraw money following a decline in the market value of bank assets. >more

PHANTOM OF THE OPERA: ETF SHORTING AND SHAREHOLDER VOTING
Richard B. Evans, Oğuzhan Karakaş, Rabih Moussawi, and Michael Young
2023
The short-selling of exchange-traded funds (ETFs) creates “phantom” ETF shares, trading at market prices, with cash flows rights but no associated voting rights. Unlike regular ETF shares backed by underlying securities that are voted as directed by the ETF sponsor, phantom ETF shares hedged by the underlying basket as part of market-making activities result in a significant number of sidelined votes of the underlying securities. We find increases in phantom shares for the corresponding underlying securities are associated with decreases in the number of proxy votes cast (for and against), and increases in broker non-votes, voting premia, and value-reducing acquisitions. >more