Capital Markets Corporate

September 11, 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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Government pledges to increase number of affordable homes 
As part of a £12.2bn investment in increasing affordable housing, the Government has announced new measures to help more people get onto the property ladder. A new shared ownership model will be introduced where the minimum initial share to buy in a property is reduced from 25% to 10%, and additional home shares will be available for purchase in 1% instalments with heavily reduced fees. Half of the new homes will be available for affordable home ownership, while the rest will be made available for rent at a discounted rate. (From BBC News, 8 September 2020)

Investors look to bonds as equities ‘detach’ from reality 
According to figures from the Investment Association, £1.8bn worth of bonds were invested in during July, showing that fixed income was the best-selling asset class among investors during this period. The shift towards bond investment has been steadily rising in recent months, with £1.9bn and £1.2bn of net inflows into the asset class in May and June respectively. It is suggested that this trend is a sign that the sector considers equity markets to have become “detached from economic reality”, and that fixed income is seen as a safer asset in relation to equities, given its immunity from the wider market. (From FT Adviser, 8 September 2020)

Global securities regulator pushes for common ESG reporting framework
The global umbrella body for securities regulators – the International Organisation of Securities Commission – is progressing plans to produce a universal framework to govern how companies disclose sustainability risks. Rising popularity for funds focusing their investment criteria on ESG principles has led asset managers to intensify scrutiny on firms’ sustainability credentials. Providing common reporting rules would reduce difficulties when comparing different companies’ ESG disclosures, helping to better inform fund managers’ decisions when allocating investors’ capital. (From the FT, 7 September 2020)

Fears mount over future of 10% mortgage market
Buyers with smaller deposits fear they will not be able to purchase a house as lenders rapidly rein in high loan-to-value (LTV) mortgages. High street banks have pulled 90% products to cope with surging demand from borrowers. The contraction in the high LTV market may have also been driven by banks hedging against riskier borrowers as a result of the declining economic outlook caused by the pandemic and resulting lockdowns. At the beginning of March, there were 779 deals for first-time buyers with a 10 per cent deposit. Now, there are 60, according to the latest data from Moneyfacts. (From The Times, 5 September 2020)

City firms offer staff perks to tempt them back to the office
High-profile private equity and asset management firms are offering employees incentives and changing policies to encourage them to return to the office. Firms, including Blackrock and Advent International, are offering to pay for taxis to the office to reduce the risk of employees contracting coronavirus on public transport, while other firms are providing fortnightly testing for staff. The measures come as the Government urges City workers to head back into the office in an effort to help boost income for city-centre located businesses. (From Private Equity News, 9 September 2020)

 

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