Capital Markets Corporate

February 19, 2021

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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Pound hits three-year high on vaccination hopes 

The pound has hit its highest level against the dollar in nearly three years, surpassing $1.39 and hitting a nine-month high against the euro at €1.147. This follows rising optimism that lockdown restrictions will soon be eased with more than 15 million people having now received their first Covid jab. The FTSE 100, the UK’s main share index, also rose this week by 2.6%, again signalling early signs that the UK is on the road to economic recovery. (From BBC, 16 February 2021)

ESG demand prompts more than 250 European funds to change tack

Rising demand for sustainable investment prompted managers to change the strategy or investment profile of 253 European funds in 2020. According to new data from Morningstar, this helped push regional assets invested in funds with an ESG tilt to a record €1.1tn by the end of December. In addition, 2020 saw 505 new ESG fund launches in Europe, and this heightened sector interest in green and socially responsible credentials has also encouraged managers to introduce sustainability criteria to existing funds. (From Financial Times, 16 February 2021)

City watchdog intensifies scrutiny on cryptocurrency firms  

The FCA is cracking down on cryptocurrency firms amid a surge in interest from investors. The City regulator launched 52 investigations into these firms last year in an effort examine whether their risk-management controls are robust enough to identify potential losses for prospective investors. Growing interest in these assets among investors has been partly triggered by assets such as Bitcoin winning endorsements from high profile public figures, including Tesla founder Elon Musk. (From This is Money, 14 February 2021)

European banks use pandemic to clean house

Europe’s major banks are leveraging the pandemic to justify cost-cutting drives. Firms such as Commerzbank, Deutsche Bank and HSBC have drastically reduced staffing levels, disposed of bricks-and-mortar branches and re-aligned their business models to focus on providing digital-online banking services to customers. The actions can be partly attributed to efforts to remain profitable amid record low rates and souring loan books resulting from the economic disruption caused by the pandemic. The cuts also follow a longer-term trend within the sector that has seen many banks reduce headcount in their investment banking arms. (From Private Equity News, 16 February 2021)

Bullish outlook rife among fund managers 

Fund managers are holding their lowest amount of cash in a decade and have increased their equity allocation levels to the highest since February 2011. The bullish behaviour is being partly driven by growing expectancy that the global economic rebound from the damage inflicted on it by the coronavirus pandemic may be just around the corner. Loose monetary policy and imminent fiscal stimulus in the US is improving conditions for equity markets, prompting fund managers to pile into stocks in anticipation that stock valuation could continue to climb. (From Financial News, 16 February 2021)

 

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