NEWSLETTER of November 1, 2024

The following content has been added at finexpert:

Alix Partners
HIGH RATES AND MATURITY WALLS: DEBT REFINANCING CHALLENGES IN THE DACH REGION
The DACH region is navigating a complex financial landscape marked by elevated debt levels, rising interest rates, and looming maturity walls. In the wake of the pandemic, companies across the region have faced growing pressures as they approach a wave of upcoming debt maturities and tightening refinancing conditions. Many firms took on additional debt to weather the economic turbulence, which has further complicated the corporate landscape. While the immediate effects of the pandemic have begun to recede, these elevated debt levels have created a ripple effect, leading to new challenges in refinancing. >more

Kearney
ZOMBIE BUYERS BEWARE
The zombie invasion continues. The number of corporate undead rose yet again in 2023, contributing to an increase that’s averaged 8.8 percent annually since 2010. The number of zombie companies that don’t produce enough profits from operations to meet their debt obligations increased 7.4 percent last year. The undead now account for 5.8 percent of all publicly traded businesses worldwide. What’s more, investors continue to pay substantial premiums for zombies because in the first year after a deal, undead companies generate double-digit total shareholder returns that are comparably higher than those of their non-zombie counterparts. But in short order, the surplus value they create decreases to be more in line with that of other, non-zombie companies. >more

European Investment Fund | Invest Europe
VC SURVEY 2024
Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, has joined forces again with the European Investment Fund, Europe’s largest venture capital investor, for the Venture Capital Survey 2024. The study highlights how exits have become the biggest challenge for venture capital in the past year, but that a majority expect a pick-up in activity in the next 12 months as interest rates fall and conditions for selling portfolio companies improve. >more

Deloitte
ECONOMIC TREND BRIEFING: INVESTITIONEN IN DEUTSCHLAND IM WANDEL – PRODUKTION WANDERT AB
German companies want to invest more abroad in the coming years, as the results of the focus questions from the current Deloitte CFO Survey for fall 2024 show. 185 CFOs of major German companies took part in the survey, which was conducted from September 12 to October 2. Currently, 82% of companies in Germany still focus their investments here. However, a look into the future shows that this proportion is set to fall by 19 percentage points in five years' time. >more

THE DISTRIBUTIONAL CONSEQUENCES OF BITCOIN
Ulrich Bindseil, and Jürgen Schaaf
2024
The original promise of Nakamoto (2008) to provide the world with a better global means of payment has not materialized. Instead, the focus has increasingly shifted to Bitcoin as an investment asset promising high capital gains. Promoters of this investment vision put little effort relating Bitcoin to an economic function which would justify its valuation. While most economists argue that the Bitcoin boom is a speculative bubble that will eventually burst, we analyse in this paper the impact of a Bitcoin-positive scenario in which its price continues to rise in the foreseeable future. What sounds intuitively promising or at least not harmful is problematic: Since Bitcoin does not increase the productive potential of the economy, the consequences of the assumed continued increase in value are essentially redistributive, i.e. the wealth effects on consumption of early Bitcoin holders can only come at the expense of consumption of the rest of society. If the price of Bitcoin rises for good, the existence of Bitcoin impoverishes both non-holders and latecomers. While previous discussions on the redistributive effects of Bitcoin assumed that badly timed trading was a necessary condition for losses, this paper shows that neither poor timing of trades nor holding Bitcoin at all are necessary for impoverishment under a Bitcoin-positive scenario. >more

HOUSE PRICES AND RENTS
Eugene F. Fama, and Kenneth R. French
2024
Variation in monthly metro area house prices unrelated to expected rents clouds the information about future rents in price-rent ratios and lagged changes in house prices. The variation in house prices unrelated to expected rents is, however, correlated across areas, and the problem is mitigated by measuring rent growth regression variables net of their monthly cross-section (across-area) means. This control for price variation unrelated to expected rents substantially enhances the information about future rents that we extract from price-rent ratios and lagged changes in house prices. >more