The US stock market's bull run and a rush of interest in companies that cater to the "new normal" life during a pandemic have prompted a surge in initial public offerings that could achieve the highest dollar value since 1999, according to data from Ally Invest and Bloomberg. By the end of August, 143 companies had raised $50.4 billion, and Ally Invest expects those figures to reach 206 flotations with potential proceeds of $72 billion by the end of the year.
Modern Money Murmurs: My, how things change over just a few months. What started out as one of the slowest years for IPOs is shaping up to be quite the opposite.
The EU has released a plan for growing capital markets to decrease dependence on City of London firms and to help businesses recover from the coronavirus recession. The EU wants companies to reduce use of bank loans and instead get capital from stock and bond markets.
Investment strategies that were paying off while inflation expectations were rising have reversed to return losses in recent weeks. Stocks, US Treasurys, speculative-grade corporate bonds, precious metals and copper are all under pressure as expectations of deflation become prevalent.
Shifting fundamentals mean investors should switch out of European equities and into emerging-market stocks, Citigroup strategists say. "We think it makes sense to trim some developed-market specific risk at a time where near term probabilities are skewed to some regional economic surprise indexes turning negative again, led by Europe," according to a note from the strategists.
Swiss National Bank Chair Thomas Jordan says the central bank has no knowledge of a potential merger between UBS and Credit Suisse. Jordan has dismissed talk of a deal as rumours and has declined to comment on regulatory implications.
Societe Generale has made significant gains by developing structured products but must urgently address the challenge of reducing the downside that has emerged during the coronavirus pandemic.
Racial inequality has cost the US economy $16 trillion in growth during the past 20 years, according to a study from Citigroup. The study, which outlines strategies for repairing the imbalance, estimates $13 trillion of the gap stems from lending inequality, $2.7 trillion comes from wage inequality and lost opportunities in housing and education make up the rest.
The UK Financial Conduct Authority wants banks and investment firms to better guard against misconduct as staffers work from home and are less monitored for compliance. More workers are expected to resume remote work as coronavirus cases rise again, and though companies have managed the challenge, the FCA is "going to be looking to them to find perhaps some more creative, resilient solutions", says Megan Butler, an executive director at the FCA.
Special-purpose acquisition companies, also known as blank check companies, are facing greater scrutiny on matters such as disclosure and compensation, US Securities and Exchange Commission Chair Jay Clayton says. Clayton acknowledges the usefulness of SPACs in providing an alternative to initial public offerings but says the SEC is concerned about "transparency and whether investors are getting all the information they need".
FTSE Russell plans to include Chinese government bonds in the World Government Bond Index starting in October 2021. The move could see $140 billion flow into the Chinese bond market, according to Goldman Sachs.
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