Basel IV and its Impacts on the Markets

Download PDF What are the Basel Agreements? Financial risks have long been observed and studied, but it was only in 1974, with the failure of West Germany’s Bankhaus Herstatt, that central bankers became aware of and decided to act on settlement risk. For these very purposes, the Bank of International Settlements (BIS), a branch of the Financial Stability Board (FSB), established the Basel Committee that very same year. The aim of the newly fledged committee Read more…

Australia served one of the biggest PE deal in its history – Brookfield and EIG in for Origin Energy in a $11.8bn deal

Download PDF Introduction On November 10th 2022, Origin Energy Ltd. [ASX : ORG], received and backed an $11.8bn takeover bid from a consortium led by Canada’s Brookfield Asset Management [NYSE : BAM] and private equity firm EIG Global Energy Partners. The business is to be split up, with Brookfield acquiring the retail and energy supply business, whilst EIG will take over the company’s gas operations and its stake in the Australia Pacific LNG project. The Read more…

Thermo Fisher to Buy the Binding Site Group

Download PDF Introduction On October 31st, Thermo Fisher Scientific [TMO: NYSE], one of the global leaders in the supply of scientific instrumentation, announced that it had entered a definitive agreement to acquire The Binding Site Group, a Birmingham-based specialty diagnostics firm. European private equity firms Nordic Capital and Five Arrow Principal Investments, owners since 2011, exited The Binding Site in an all-cash transaction, valued at $2.6bn (£2.25bn). The acquisition will allow Thermo Fisher to further Read more…

Correlation: Trading, Diversification, and Recent Developments

Download PDF Introduction The perfect storm of harsh macroeconomic conditions and geopolitical uncertainty has taken its toll on the markets. 2022 saw widespread selloffs across all asset classes and is considered to be one of the worst years on record for investors. Although the equity markets have fared worse through previous financial crises (2000, 2008, and 2020), what makes this year’s market performance so destructive is that all asset classes are down. Systematic risk has Read more…

Elon Musk’s Twitter Takeover Saga

Download PDF Introduction On October 27th, Elon Musk – the richest person in the world with a net wort of almost $200bn – finalized the acquisition of the social media company Twitter, Inc, for a total enterprise value of approximately $44bn. Musk is the co-founder and CEO of Tesla [TSLA : NASDAQ], an American multinational automotive and clean energy firm and SpaceX, an American spacecraft manufacturer, launcher, and a satellite communications corporation. He started investing Read more…

Market Recap 20/11/2022

Download PDF US On Monday, equities finished a little lower after the rally caused by the weaker-than-expected inflation reading last week. Interest rates moved lower with the 10-year U.S. Treasury yield down from 4.15% to below 3.9%. Markets overall moved sideways in expectation of more consumer data coming out during the week. On Tuesday, the Producer Price Index (PPI) report reassured markets that inflation was moderating, with a better-than-expected Core PPI (excluding food and energy) Read more…

Johnson and Johnson to acquire heart pump maker Abiomed in $16bn deal

Download PDF Introduction On November 1 Johnson & Johnson, an American multinational which develops medical devices and is ranked 36 in the fortune 500 companies with yearly sales of $98.3bn, announced its proposal to acquire AbioMmed [ABMD: NASDAQ], a cardiovascular technology group. The acquisition, worth $16.6bn, will make Johnson & Johnson (J&J) [JNJ: NYSE] owner of the firm’s heart pumping technology. Johnson & Johnson’s acquisition of AbioMed, further places the firm within the Medical Technology Read more…

Market Recap 13/11/2022

Download PDF US On Monday Meta announced that it planned to lay off thousands of people as early as Wednesday. Despite this, its stock price jumped by 3%. Apple stock, on the other hand, fell by 1% because of warnings that it might produce three million fewer iPhone 14 than they initially expected earlier this year. Palantir, the big data analytics company, announced on Monday in third-quarter results that it has doubled its business clients Read more…

Bond Liquidity, Volatility and Basis Trading

Download PDF Introduction In 2022, rates traders have had to navigate a landscape of deteriorating liquidity in sovereign debt markets. Over the past few years, there have been multiple episodes of severe illiquidity in US Treasuries and related markets. Firstly, US repo rates spiked in September 2019, with intraday secured overnight funding rates reaching as much as 10% and a day over day increase in interest rates of over 280bps. Secondly, Treasuries experienced decreased liquidity Read more…

$10.9bn on the table – Poseidon to acquire Atlas Corporation, global shipping container lessor

Download PDF Introduction On November 1, 2022, Poseidon Acquisition Corp. entered into a definitive agreement to acquire Atlas Corporation (NYSE: ATCO) in an all-cash deal of nearly $10.9bn (about €10.9bn). The investment vehicles backed by David L. Sokol, Chairman of Atlas’ Board of Directors, affiliates of the Washington Family, Canadian investment firm Fairfax Financial Holdings Limited (TSE: FFH), and Japanese transportation and shipping company Ocean Network Express (TYO: ONE) already owns 68% of Atlas’ fully Read more…

Blackstone, ADIA & GIC’s acquisition of Emerson’s climate branch

Download PDF Introduction On the 31st of October 2022, Emerson [EMR: NYSE] announced a definitive agreement under which it would sell a majority stake in its Climate Technologies company to private equity funds managed by Blackstone [BX: NYSE] in a deal valued at $14bn. Emerson will keep a non-controlling ownership interest in the brand-new standalone joint venture while receiving upfront, pre-tax cash proceeds of almost $9.5bn. In an effort to consolidate its operations, Blackstone will Read more…

Central Banks’ Two Percent Inflation Target

Download PDF New Zealand as the trendsetter New Zealand saw its Inflation rate persistently over 5.5% between 1975 to 1990, with multiple years of inflation at or above 12%. However, starting from 1991, a sharp drop to around 1-2% is observable. One of the main drivers is the Reserve Bank Act from 1989, which essentially lead to a formulation of an inflation target by the then finance minister David Caygill and the Governor of the Read more…

Market Recap 06/11/2022

Download PDF US The month of October ended with the Dow Jones recording its biggest monthly percentage gain since 1976. However, these gains soon evaporated as all US major indexes ended the week down following the 75bp increase in interest rates by the Fed and a mixed job report on Friday, putting the fed funds rate at a range of 3.75% – 4.00%. The Dow Jones Industrial Average ended the week down 1.4%, while the Read more…

Stock Prices Forecasting with Machine Learning

Download PDF Introduction Stock prices forecasting is a deeply researched topic, which has been enhanced by the use of Machine Learning techniques since the late 90s. In this article, we present the main methods and models employed by the current literature, along with our own proprietary model. Literature Review Over the past 25 years, various applications of Machine Learning to stock prices forecasting have been proposed. Due to its learning nature, Machine Learning is a Read more…

Wind of change? Shell ventures into Africa by acquring a Nigerian renewable energy producer

Download PDF Introduction On the 28th of September 2022, Shell acquired the Nigerian-owned renewable energy company Daystar Power. This purchase represents a bold move for Shell since it is its first acquisition of a power company in Africa. This deal may be what Daystar Power needs to handle the recent surges in demand for electricity in Nigeria and neighbouring countries. The price at which Shell acquired Daystar Power’s 32 MW generating capacity remains undisclosed and Read more…