Negative interest rate policy – friend or foe?

Download as PDF Introduction Interest rates have been persistently low across several advanced economies since the Global Financial Crisis. As short- and medium-term rates approached zero, central banks were compelled to turn to increasingly forceful measures in order to provide an adequate monetary stimulus. In 2012, the Danish National Bank was the first one to lower its key interest rate to the negative territory. In subsequent years, the ECB and the central banks of Sweden, Read more…

Market Recap 08/03/2020

Download as PDF US US market ended another wild trading week with a slight gain after last Friday substantive losses. S&P500 closed at 2,972.37, with a weekly gain of 0.61%. Dow-Jones Industrial Average Index (DJIA) was up 1.79% reaching 25,864.78. The demand for haven assets is rising and the bets are increasing for the Federal Reserve to cut interest rates again. US Federal Reserve has cut half a percentage point this week. The policy of Read more…

The Accuracy of Relative Valuation: Focus on the Banking Industry

Download as PDF Introduction Relative valuation is a widely spread approach among practitioners and is, broadly speaking, a double-check methodology, to back-test more sophisticated valuation techniques. Relative valuation relies on the main assumption that stock markets are on average efficient and fundamentals are correctly priced in. The aim of this article is to examine the effectiveness and the accuracy of relative valuation through an empirical analysis. The first paragraph highlights some of the main features Read more…

Moving Closer to the Masses : Morgan Stanley to Purchase E*Trade for $13bn in all-stock deal

Download as PDF Morgan Stanley [MS:NYSE] – Market Cap as of 06/3/2020: $64.116bn E*Trade [ETFC:NASDAQ] – Market Cap as of 06/3/2020 $9.33bn Introduction On Feb 20th 2020, Morgan Stanley announced it was looking to buy E*Trade in a $13bn deal, all stock deal—the largest acquisition by a U.S. bank since the 2008 financial crisis. The deal itself is a bet on smaller customers and Morgan Stanley’s impressive wealth management division, as it shifts even further Read more…

Deal Recap 8/03/2020

Download as PDF BSIC has brought you some of the most interesting deals over the last week, we hope you’ll enjoy! Elliot Management builds a 4% stake in Twitter Deal Value: $1bn | Deal Type: Shareholder Activism | Date: 01-Mar-2020 | Nationality: US | Sector: Technology Paul Singer has succeeded in building a stake in Twitter worth more than $1bn, obtaining a share of about 4% in the social media company. The intention is clear: Singer wants Jack Dorsey, founder and actual CEO, Read more…

Democratic Primaries: A markets perspective Part 2 – The Super Tuesday Follow-Up

Download as PDF Introduction Back in December we published an Article called “Democratic Primaries: A markets perspective” in which we provided an overview of the most significant Democratic candidates, namely Berny Sanders and Elizabeth Warren from a more liberal, left-wing side and Joe Biden and Michael Bloomberg from a more moderate centrist side, and their proposed legislations. We continued to form an opinion on how markets would react if said candidates would become the democratic Read more…

Market Recap 01/03/2020

Download as PDF United States The US markets experienced the worst week since 2008 due to a massive sell off caused by coronavirus uncertainty. S&P500 closed at 2954.22 with a weekly loss of a staggering 11.50% whilst the Dow-Jones Industrial Average (DJIA) Index finished the week at 25.409, down 12.00% over the prior week. If financial markets continue to plummet and the virus continues to spread, the Fed might need to intervene in the form Read more…

Franklin Templeton Acquires Legg Mason to Survive the New Threats of the Asset Management Industry

Download as PDF Franklin Templeton Investments [BEN] – Mkt Cap as of February 25th, 2020: $11.79bn Legg Mason [LM] – Mkt Cap as of February 25th, 2020: $4.35bn Introduction As Invesco’s chief executive Marty Flanagan correctly pointed out some months ago, the Asset Management industry is going through dramatic changes right now; in his words: “Winners and losers are being created today like never before. The strong are getting stronger and the big are going Read more…

Overhaul of Common Practices in Finance with Network Models

Download as PDF Introduction In many financial studies the default assumption is that changes in prices are random and independent between different financial instruments. Opposing studies, thus, are often concerned with discovering dependencies and whether they are driven by common economic factors. One approach to the problem are network graphical models. With respect to finance theory, network graphical models appeared in the literature in 1999 and have been advanced since. Here, we want to delineate Read more…

Consolidation in the European Financial Services Sector

Download as PDF European Integration As an introduction, we provide a brief overview of the pan-European regulation on which Financial Services is largely based and which helps explain the convergence and the subsequent attractiveness of the industry towards consolidation. Its objective is the further integration of European countries by the creation of a single market for services, in particular Financial Services. Banking Union – is the first pillar in the system and it is finalized Read more…

ESG Investing: How to make your returns go green

Download as PDF Introduction We have touched upon the new trend of ESG factors shaping investors preferences in the “Green Bonds Boom” article published in the last semester. This time around we will try to analyze how environmental, social and governance responsibility may be driving equities, in order to see what will the future of asset allocation look like as many institutional and retail investors seem to change their lenses. ESG in 2019 First, let’s Read more…

Deal Recap 01/03/2020

Download as PDF The spiking diffusion of COVID-19 outside of China, particularly in South Korea, Italy and Iran, has negatively affected financial markets, among concerns about its impact on business activity: in the US, the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite were all in correction territory this week. Due to this climate of uncertainty, the weak worldwide deal activity, observed already at the beginning of the year, seems on track to continue. Read more…

The Death of FX Volatility, What’s Next?

Download as PDF Introduction Over the past few years, volatility in the foreign exchange markets has entered a marked downward trend, which ultimately culminated with the signing of the US-China Phase One trade deal in January 2020. This descending movement has characterised both Developed and Emerging Markets currency pairs and was largely driven by a macroeconomic environment in which central banks’ easier monetary policies play the lion’s role. Indeed, as a result of the excess Read more…

Weekly Deal Recap

Download as PDF BSIC has brought you some of the most interesting deals over the last week, we hope you’ll enjoy! Franklin Templeton acquires Legg Mason for 4.5bn Deal Value: $4.5bn |Deal Type: Acquisition | Date: 18-Feb-2020 | Nationality: US | Subsector: Finance Franklin Templeton, the US global investment firm with $740bn of AUM, is set to acquire its competitor Legg Mason for $4.5bn in an all-cash transaction, paying a 23% premium. The acquisition of Read more…

Private Equity Snaps Up European Telecom Assets: KKR Sells Deutsche Glasfaser to EQT and OMERS for €2.8bn

Download as PDF Introduction KKR, the massive American private equity (PE) fund, has agreed on the 10th of February, 2020, to sell the ultrafast German fiber internet business Deutsche Glasfaser in a €2.8bn deal to EQT and Omers, respectively a private equity firm and a Canadian pension fund. According to what has been revealed so far on the deal, EQT plans to merge the company with Inexio, the German fiber optic network operator which the Read more…