NEWSLETTER of November 5, 2021

The following content has been added at finexpert:

KKR
CREDIT MARKET REVIEW Q2 2021
We believe this market will continue to keep investors on their toes, especially as the Fed gets closer to tapering and reflationary trends continue. Despite the positive tailwinds of rapid growth we are currently experiencing, we want to highlight and caution that this is a new chapter in history. We cannot discount the impact of higher than anticipated inflation on corporate margins, labor and wages, as well as cost of goods. >more

Mergermarket | SS&C Intralinks
GLOBAL M&A DEALMAKERS: REPORT 2022
Mergermarket is pleased to present Global M&A Dealmakers: Report 2022, published in association with SS&C Intralinks. Amidst the backdrop of a fast-changing landscape, we surveyed 300 global M&A dealmakers to find out current sentiment and COVID-19’s impact on the future deal environment, along with challenges and opportunities on the horizon. Almost two-thirds (64 percent) of dealmakers in our survey expect the level of M&A activity over the next 12 months to increase. Nearly a quarter (24 percent) expect activity to increase significantly. An overwhelming 83 percent of firms expect to undertake middle-market M&A deals (deals worth less than USD two billion) over the next 12 months. >more

PwC | Deutsche Startups e.V.
DEUTSCHER STARTUP MONITOR 2021
The business climate in the German startup scene has brightened considerably and is back at the level of 2019. Founders are finding increasingly better conditions in this country: Two-thirds rate the startup ecosystem in their location as good or very good - that is four percentage points more than in the previous year. This positive development is also reflected in the labor market: The average number of employees is rising from 14 to 18, and the trend is also upward for planned new hires. >more

BCG
PRIVATE INVESTORS MUST COMMIT AS MUCH AS EIGHT TIMES MORE TO THE LOW-CARBON ECONOMY
The goal of the Paris Agreement is to limit the earth’s warming to less than 1.5°C by 2050, which will require reaching net zero — the point at which the global greenhouse gas (GHG) emissions released into the atmosphere are balanced by those removed. But doing so using the technologies we currently have at our disposal — including electric vehicles (EVs), energy storage, solar energy, wind energy, nuclear energy, and biofuels — won’t be enough. To get the job done, according to the IEA, as much as $21 trillion in new investment in both mature and newer low-carbon technologies will be needed over the next ten years. And of that $21 trillion, fully 10% — a minimum of $2.1 trillion — will likely have to come from private investors, including venture capitalists (VCs), private equity (PE) firms, corporate venture arms (CVAs), and financial institutions. >more

THE LONG-LASTING EFFECTS OF LIVING UNDER COMMUNISM ON ATTITUDES TOWARDS FINANCIAL MARKETS
Christine Laudenbach, Ulrike Malmendier, and Alexandra Niessen-Ruenzi
2020
We analyze the long-term effects of living under communism and its anticapitalist doctrine on households' financial investment decisions and attitudes towards financial markets. Utilizing comprehensive German brokerage data and bank data, we show that, decades after Reunification, East Germans still invest significantly less in the stock market than West Germans. Consistent with communist friends-and-foes propaganda, East Germans are more likely to hold stocks of companies from communist countries (China, Russia, Vietnam) and of state-owned companies, and are unlikely to invest in American companies and the financial industry. Effects are stronger for individuals exposed to "positive emotional tagging", e. g., those living in celebrated showcase cities. Effects reverse for individuals with negative experiences, e.g., environmental pollution, religious oppression, or lack of (Western) TV entertainment. Election years trigger further divergence of East and West Germans. We provide evidence of negative welfare consequences due to less diversified portfolios, higher-fee products, and lower risk-adjusted returns. >more

ESG AND DOWNSIDE RISKS: IMPLICATIONS FOR PENSION FUNDS
Zacharias Sautner, and Laura T. Starks
2021
Due to their long-term horizons, pension funds face enhanced exposures to the long-lived effects of many ESG risks. Moreover, given the potential consequences of being underfunded, pension funds are particularly exposed to ESG-related downside risks, especially those related to climate change. We discuss the implications of these risks and provide evidence on institutional investors’ perspectives on climate-related downside risks and how these risks are priced in financial markets. We also document how institutional investors address climate risks in the investment process, with a focus on the role of engagement versus divestment. >more