Deutsche Bank Vulnerabilities
After a decline last week, Deutsche Bank (NYSE:DB) shares regained their position and rose by 6% on Monday. However, investors are still concerned and have begun examining the bank’s vulnerabilities. The bank’s default credit swap cost decreased on Monday, but it is still at pandemic levels. UBS Group AG’s (NYSE:UBS) merger with weaker rival Credit Suisse Group (NYSE:CS) last week triggered concerns about the global banking system’s stability.
Binance Faces Lawsuit
On Monday, US regulators sued Binance Holdings Ltd., alleging that the world’s biggest cryptocurrency exchange operator kept an illegal foothold in the American market and violated rules meant to prevent illegal financial activities. The lawsuit sets up a battle between the Commodity Futures Trading Commission, one of the smallest financial regulators in the United States, and a global company led by one of the industry’s most influential figures, Changpeng Zhao. The CFTC is a civil regulator that has the authority to obtain fines against people who break its rules.
Eurozone Deposit Outflows
According to data released on Monday by the European Central Bank, depositors have withdrawn €214bn from eurozone banks in the last five months, with February’s outflows hitting a record level. This trend indicates that even before the banking sector’s current turmoil, which resulted in the collapse of three US lenders and drove Credit Suisse (NYSE:CS) to merge with UBS (NYSE:UBS), banks were struggling to attract and retain depositors. This trend is a reversal from the large amounts of money that had been pouring into banks, particularly during the pandemic.
JPMorgan High-Yield Interest
JPMorgan Asset Management (NYSE:JP) is interested in high-yield bonds if the United States experiences a recession, hoping to acquire sectors that will outperform when the economy bounces back. Last week, the US bank purchased bonds from utility companies as part of “small adjustments” to its portfolios. Lisa Coleman, head of investment grade credit, expects the firm to look for opportunities in the BB high-yield sector when the timing is right, but she believes that spreads between investment grade and high yield must widen and decompress further.
ESG ETF Outflows
According to data, an environmental, social, and governance-focused iShares ETF, ESG Aware MSCI USA ETF (ESGU), hemorrhaged $3.9bn in one day last week. On March 21, the day following the sell-off, the ESG ETF had $14.4bn in assets under management. On the same day, the iShares MSCI USA Quality Factor ETF (QUAL) received $4.8bn in net inflows, bringing its assets up to $25bn on March 21. The ETF’s redemptions represent a significant decline from its recent flows, which saw a total net outflow of $1.6bn over the year ended February 28.
Korean Activist Investors
In Korea, a rising number of activist investors are targeting domestic players to unlock higher share prices. According to analytics firm Insightia, the number of companies targeted by activist investors has increased six-fold over the past three years, reaching 47 in 2022. This makes Korea the world’s fifth-largest activist market. Despite being among the world’s cheapest, with the Kospi index trading at a price-to-book ratio of around 0.85 times, Korean companies have caught investors’ attention.
Tesla Depreciation Drop
Sales data shows that the value of second-hand Tesla (NASDAQ:TSLA) cars has drastically dropped due to the electric-vehicle manufacturer’s recent price cuts for new models over the past six months. According to CAP HPI, a pricing agency, a new Model 3 with a long-range battery purchased for £57,435 in January 2022 is expected to decline by 46% to £31,300 by January 2024. Tesla’s cars have experienced significant depreciation in other countries, in addition to the UK, which is one of Tesla’s largest markets.
Isar Aerospace Funding Boost
Despite a challenging funding environment in the space tech sector, Munich-based rocket start-up Isar Aerospace has secured $165mn from new and existing investors to accelerate towards its planned launch this year. The funds will help the company ramp up manufacturing of its Spectrum rocket and will be sufficient to carry Isar through several launches, whether or not they are successful. Isar has raised $330mn in total since its establishment in 2018, but has only used up $150mn so far.
Oversubscribed AI IPO
Presight AI, a data analytics company, experienced a surge in shares on their first day of trading on the Abu Dhabi bourse following a $496mn initial public offering that was 136 times oversubscribed. The demand is not a one-off occurrence, as it comes two weeks after Adnoc Gas raised $2.5bn in the emirate’s biggest listing. The Middle East and North Africa witnessed a record 51 IPOs in 2022, raising $22bn, a 179% increase from 2021, according to EY. This year’s market looks “healthy.”
Lyft Co-Founders Departure
Lyft (NASDAQ:LYFT) co-founders Logan Green and John Zimmer will step down from their positions running the company as recent developments show that the US ride-hailing service has fallen behind its arch-rival, Uber. David Risher, a Lyft board member and early Amazon employee, will take over from Green as chief executive on April 17. Zimmer will resign as president on June 30. Since the onset of the coronavirus pandemic, Lyft has steadily lost market share to Uber, which was better able to withstand a decline in ridership by relying on its food-delivery service and international diversification.
Chips Act Requirements
The Commerce Department announced that semiconductor firms applying for US grants under the Chips Act will be required to submit detailed revenue and profit projections for their new chip-making plants to assess their applications. The Chips Act provides $53bn to help restore US manufacturing strength in semiconductors. Companies seeking to build leading-edge chip factories in the US can apply for the funds starting Friday, while the application process for companies looking to build current-generation and mature technology facilities will begin on June 26.
Meta Bonus Revamp
Meta Platforms (NASDAQ:META), Facebook’s parent company, plans to reduce some bonus payouts and assess employee performance more frequently, according to an internal memo. This move is part of a sweeping revamp of the social media company that includes significant head-count reductions. Employees who receive a “met most expectations” rating in their 2023 year-end reviews will receive a smaller percentage of their bonus and restricted stock award due in March 2024, with the bonus multiplier for that grade reduced to 65%.
Adani Stock Slump
On Tuesday, the Adani Group witnessed a major slump in stocks, leading to a loss of over 523 billion rupees ($6.4 billion) in market value. This was the largest drop in value since early February, raising fresh concerns about the conglomerate’s ability to repay its debt. Adani Ports (NSE:ADANIPORTS) experienced a decline of over 9%, going below the price paid by GQG Partners to buy a stake earlier this month. According to a report by the Economic Times, the group is attempting to renegotiate the terms of $4 billion worth of loans. The report has resurfaced concerns about the group’s access to funds following allegations of fraud by US short seller Hindenburg Research in January.