NEWSLETTER of September 1, 2023

The following content has been added at finexpert:

Neuberger Berman
EQUITY MARKET OUTLOOK 3Q 2023
Like many, we have been surprised by the strength of U.S. equities in the face of rising interest rates, sticky inflation, a regional banking crisis and persistent geopolitical tension. Megacap growth stocks (MEGAs) dominated during the first half of the year, helped along by excess liquidity (soon set to unwind), fortuitous positioning (as investors, both systematic and discretionary, shifted from being grossly under-positioned in equities to distinctly above average following last year’s lackluster performance), and giddy exuberance over AI (and the productivity gains it promises). >more

Neuberger Berman
FIXED INCOME INVESTMENT OUTLOOK 3Q 2023
Central banks are finding it hard to finish the long journey toward inflation normalization, but we believe that policy rates are likely at or near their peaks—and could be maintained at elevated levels for some time. In an environment of slowing growth, restrictive monetary policy and rising idiosyncratic risk, we favor shorter durations, quality and a focus on security selection. >more

ValueTrust
EUROPEAN CAPITAL MARKET STUDY
ValueTrust publishes the 12th edition of the Europe Capital Market Study, which is published semi-annually. In this study ValueTrust shows the capital market developments in the first half of 2023 and analyzes the cost of capital of ten sectors for Europe using different methods. >more

ValueTrust
DACH CAPITAL MARKET STUDY
ValueTrust, finexpert and the Institute of Management Accounting and Auditing at WU Vienna publish the 13th edition of the DACH Capital Market Study, which is published semi-annually. In our study, we highlight capital market developments in the first half of 2023 and analyze the cost of capital of twelve sectors for the DACH region using various methods. >more

Institut der deutschen Wirtschaft
KONJUNKTURPROGNOSE: DEUTSCHLANDS WIRTSCHAFTSLEISTUNG SCHRUMPFT 2023
The German economy is in a state of shock: Because German companies are particularly affected by global fluctuations, they are feeling the global problems all the more acutely this year. Raw materials and energy are scarce and expensive, global trade is limping along and demand is lower than usual. As a result, global production is expected to grow by only 2 ½ percent in 2023 - around one percentage point less than the average of recent decades. For Germany, the IW forecasts that real GDP will be almost ½ percent lower than in the previous year. >more

MEASURING THE CLIMATE TRANSITION RISK SPILLOVER
Runfeng Yang, Massimiliano Caporin, and Juan-Angel Jiménez-Martin
2023
Climate transition risk, the generated from the transition to a low-carbon economy due to changing policies, can have cross-border impacts. In this paper, we study the transition risk spillover among six major financial markets globally from 2013 to 2021. We evidence the transition risk spillover. We find that Canada and the US are main transition risk transmitters, and Europe and Japan are the main receivers of the transition risk. Such role of transmission could change over time and change according to different types of transition risk shocks. It takes around three weeks for transition risk to be fairly transmitted. On average, around 40% – 50% of local climate transition risk shocks comes from outside. The transition risk spillover is also affected by other factors. When the financial markets are more connected, the risk spillover is higher. A more tense geopolitical relationship could mean higher risk spillover. A more stringent local climate policy means lower risk received and higher risk given. We also find that a higher climate sentiment is associated with higher level of risk transmission. >more

CLIMATE CHANGE VULNERABILITY AND IPO UNDERPRICING
Thomas J. Boulton, Douglas J. Cumming, and Chad J. Zutter
2023
Studying 12,874 IPOs issued in 35 countries between 1998 and 2018, we find that first-day returns tend to be larger in countries that are more vulnerable to climate change. A one standard deviation increase in a country’s climate vulnerability index is associated with an additional $18.92 million “left on the table” for the typical offering. The positive association between climate vulnerability and underpricing is evident for all components and most sectors of the vulnerability index, stronger for smaller IPOs, and robust to alternative estimation techniques, instrumental variable analysis, and the exclusion of individual countries with large numbers of IPOs. Short-term orientation, low trust in science, and more transparent accounting disclosures attenuate the positive relation between climate vulnerability and underpricing. >more