NEWSLETTER of September 10, 2021

The following content has been added at finexpert:

McKinsey & Company
GERMAN BANKING RETURNS TO THE PLAYING FIELD
To support the transformation of the German economy that is necessary in all segments in view of fundamental upheavals, banks must also transform themselves. With an ambitious renewal course, the German banking sector can improve its operating profit by 30 to 40 billion euros by 2030 and catapult its return on equity to at least 7-8% - more than doubling the 2.9% after-tax average of the last five years. This is according to the report "Germany's banks back in the game" published by management consultants McKinsey & Company. >more

Oliver Wyman
DIGITAL ASSETS GOING MAINSTREAM: OPPORTUNITIES FOR FINANCIAL INSTITUTIONS
Digital assets are generating significant market interest. In the unregulated crypto market,  startups and early investors have enjoyed enormous value creation, while in the enterprise space, firms have taken technologies developed and tested in the crypto market and adapted it to payments and settlement, record keeping, securitization, and trading. As adoption accelerates and digital assets go mainstream across industries, there are multiple commercial opportunities for financial institutions and significant first-mover advantage to be taken. >more

FTI Andersch
EFFEKTE VON COVID-19 AUF AUSGEWÄHLTE IMMOBILIENMÄRKTE
The ongoing travel and contact restrictions, starting in the spring of 2020, have hit retailers, restaurants, hotels and office providers hard - and thus owners and landlords of these spaces. Recovery does not seem to be in sight over the short term, and the outlook for the individual sectors varies widely. In the non-food retail sector, most forecasts assume that space will decline - and will therefore have to be reallocated in the medium term. In the hotel segment, opportunities are opening up for investors with strong liquidity and hotel chains to take over shares of the market now at favorable prices. While offices are less in demand, but tend to remain stable in price due to preliminary contracts, co-working spaces, as lockdown losers from the change in the working world, could now become profiteers: with flexible rental times, office sizes and additional bookable services, they make an interesting offer for the hybrid working world. >more

BCG
GOVERNMENTS THAT INVEST IN CLIMATE INNOVATION INVEST IN GROWTH
As of today, 191 countries have ratified the Paris Climate Agreement, and more than 50% of world GDP is generated by countries that have made net-zero pledges. President Biden has announced that the US will target reducing emissions by 50% or more by 2030 (compared with 2005 levels) on the way to net zero emissions by 2050. The EU plans to be carbon neutral by 2050. China’s president has committed his country to achieving carbon neutrality by 2060. But getting there will take a lot of work. Annual global emissions of carbon dioxide equivalents amount to about 51 gigatons. We estimate that existing technologies can eliminate about 25% of current emissions, and technologies in early adoption can address another 40%. This leaves approximately 35% of current annual emissions, for which we need new technologies if we are to achieve net zero. >more

THE ROLE OF HEDGE FUNDS IN THE 2020 TREASURY MARKET TURMOIL
Marco Di Maggio
2020
This paper provides new evidence about the behavior of hedge funds during the disruptions that occurred in the Treasury market in March 2020. In contrast to some recent policy papers arguing that hedge funds were a major amplifier of those disruptions, we show that aggregate Treasury positions held by hedge funds were far too small to be the main disruptive factor. Moreover, we find that a range of parties, especially non-US official institutions, sold Treasuries as they sought to lock in US dollars in cash. The hedge funds implementing the Fixed Income Relative Value strategy behaved in a way that was consistent with market expectations as they faced challenging financing conditions when banks abruptly withdrew from funding their positions in the repo market. Overall, this evidence also highlights important vulnerabilities of the Treasury market. Since the last financial crisis, exploding federal deficits led to a significant increase in the stock of marketable Treasuries which outstripped the capacity of dealers to safely intermediate the market on their own balance sheets. >more

COMPETITION FOR ATTENTION IN THE ETF SPACE
Itzhak Ben-David, Francesco A. Franzoni, Byungwook Kim, and Rabih Moussawi
2021
The interplay between investors' demand and providers' incentives has shaped the evolution of exchange-traded funds (ETFs). While early ETFs offered diversification at low cost, later ETFs track niche portfolios and charge high fees. Strikingly, over their first five years, specialized ETFs lose about 30% in risk-adjusted terms. This underperformance cannot be explained by high fees or hedging demand. Rather, it is driven by the overvaluation of the underlying stocks. Overall, providers appear to cater to investors' extrapolative beliefs by issuing specialized ETFs that track attention-grabbing themes. >more