Capital Markets Corporate

August 6, 2020

Our Weekly Newsletter

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Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.

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FCA warns on suitability of historic property fund redemption advice
The City regulator has warned advisers that the proposed introduction of notice periods for open-ended property fund redemptions could change investment assessment criteria. Advisers would need to check the ongoing suitability of property funds for their clients, while investment platforms who offer open-ended property funds on a non-advised basis would also need to consider their appropriateness for retail investors. (From FT Adviser, 4 August 2020)

Borrowing from the ‘Bank of Mum and Dad’ falls
Recent research by Lloyds Banking Group reveals the number of people borrowing money from the ‘Bank of Mum and Dad’ has fallen over the past year, in part due to families adjusting to the financial pressures caused by the coronavirus pandemic. The study, based on surveys in March and June covering over 5,000 people, found the central reason for borrowing money was to help with existing debts. The survey did not ask respondents specifically whether they had borrowed for a deposit for renting or buying a home. However, separate research published by Savills estimated that around two-fifths of all mortgaged first-time buyers had family help last year: roughly contributing £5bn. (From Financial Times, 1 August 2020)

Private equity firms pledge to reduce carbon emissions  
Several private equity firms have signed up to a new sustainability initiative designed to reduce carbon emissions among companies they invest in, as part of an effort to combat climate change. The firms are working together to create the Initiative Climat International, a global network setting out a list of principles to effectively analyse, manage and mitigate climate-related financial risk and emissions in their businesses. This new initiative reflects the intensifying scrutiny investors are placing companies’ ESG credentials under. (From Private Equity News, 3 August 2020)

Geographical income inequality narrows, but wealth inequalities persist 
A study from the Institute of Fiscal Studies reveals geographical income and earnings inequalities in the UK are narrowing, partly driven by falls in wages impacting those at the top of the income distribution and steep housing costs acting as a drag on disposable income on households in London. However, the research stresses that regional wealth inequalities still persist, partly due to house prices in London and the South East rising 150% and 50% respectively in the decade to 2018, compared to 3% in the North East England over the same period. (From BBC News, 3 August 2020)

Demand for alternative data booms
Companies offering ‘alternative data’, such as satellite imagery and measurements of social media sentiment, have benefited from a boom in demand due to hedge funds and companies looking for insights into how to handle the coronavirus crisis. However, even before the pandemic, the total annual spending on such information by fund managers alone was predicted to reach more than $1.7bn this year, up from $400m three years ago, according to Alternativedata.org. The sources are often traditional, but the method of analysing them is new and there are now nearly 1,500 providers of alternative data. (From Financial Times, 4 August 2020)

 

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