Capital Markets Corporate

December 4, 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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Bitcoin peaks at record high close to $20,000  

Bitcoin has traded at its highest value to date, reaching $19,920 according to data-provider Coindesk. The virtual currency has risen in value by more than 170% throughout 2020, with analysts suggesting it has been a “safe haven asset” for investors at a time of uncertainty, despite continued speculation on its volatility. It is added that it took Bitcoin nearly three years to top its previous record, when it peaked about $137 lower. (From BBC, 1 December 2020)

The future is still uncertain for the UK  

There is a shifting strategy among wealth managers due to the coronavirus pandemic causing unprecedented levels of market volatility across multiple economic jurisdictions. Given the current environment, managers have been focussing on areas that provide access to a stable and diverse range of new asset classes. It is noted that ‘stability’ is heavily linked to the effectiveness of a state’s epidemiological policies and how quickly countries can recover from the crisis, impacting overall investor confidence. (From FT Adviser, 27 November 2020)

Savings: instant access accounts slash rates after NS&I cut  

After government-backed NS&I cut rates and returns last week, this has caused an exodus of savers among all providers in the sector with millions searching for better deals. According to Financial data website Moneyfacts, the last two weeks has seen a string of rate cuts to sought-after instant access accounts in the UK.  Separate data from the Bank of England revealed that UK households moved £12.3bn into mainly instant access savings accounts in October, almost double the figure for September, with a proportion of that being cash moved out of NS&I accounts. (From The Guardian, 1December 2020)

Women inflow into investment platforms  

Women are registering with investment platforms at a faster pace than men, as investors seek to capitalise on market volatility and lower prices. Women and younger people have traditionally represented a small proportion of investment platform users. However, wild stock market valuations have opened opportunities for value investors to buy low and sell high, triggering an inflow of interest in investment platforms. Low interest rates on cash savings has in part prompted women to allocate more capital to equities in an effort to lock in higher returns. (From FT, 1 December 2020)

Swelling war chests prompts PE firms to diversify portfolios 

New research reveals private equity fund managers are sitting on $1.7 trillion of cash. Firms are increasingly looking to invest in new sectors to diversify their portfolios and increase returns. Investment in private lending has risen among private equity funds, while some funds are looking to capitalise on high levels of corporate distress by acquiring assets at lower prices. Appetite for new deal structures not reliant on over-leveraging is increasing, triggered by the prospect of economic activity returning to normal once an effective Covid-19 vaccine is widely distributed. (From City A.M., 2 December 2020)

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