Capital Markets Corporate

June 4, 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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Meme stocks surge once again 

Amateur investors are pouring capital into popular ‘meme stocks’ once again as cryptocurrencies slide. Shares in cinema chain AMC have risen 150% since Bitcoin start its decline, buoyed by endorsements from retail investors on social media sites. The resurgence of thrill-seeking investors driving volatility in individual stock prices suggests the initial fervour that drove GameStop shares up at the beginning of 2021 may be embedded into the market in the long term. (From the FT, 28 May 2021)

House prices jump 10.9% as ‘race for space’ intensifies

UK house prices jumped by 10.9% in the year to May with buyers increasingly seeking larger homes and properties with gardens, according to Nationwide. The average house price has risen to £242,832, up £23,930 over the past twelve months to reach the highest level in seven years. This is a huge turnaround from a year ago when activity collapsed in the midst of the first lockdown and housing transactions fell to a record low of 42,000 in April 2020. (From the BBC, 2 June 2021)

Demonising ‘ vulture capitalists ‘ will not save the dying stock market 

While buyout firms have been accused of employing a finance model that relies heavily on risky debt, adopting a short-term investment horizon of three to five years and acquiring companies at knockdown prices, all those criticisms apply in varying degrees to public companies and traditional investors. Private equity is a legitimate source of capital and there are plenty of companies that thrive away from the short-term glare of public markets. Although there appears to be a secular decline in public companies, there is no evidence that this has or will affect the economy. (From The Telegraph, 2 June 2021)

EU agrees to force multinationals to disclose tax, piling pressure on UK 

The EU has agreed it will force large multinational companies to publish a breakdown of the tax they pay in each of the bloc’s member states and in tax havens. Under the new rules, companies with global revenues above £645m over two consecutive years must publicly disclose how much tax they pay in each of the EU member states and in 19 jurisdictions. The policy has been designed to expose how some of the world’s biggest companies avoid paying an estimated £358bn a year in taxes through shifting their profits. (From The Guardian, 2 June 2021)

SPACs cement US as premium global listing location 

The rise in popularity of blank cheque companies has further cemented the US as the premium listing location for firms. Europe and the UK are losing market share as companies rush to tap American investors in Special Purpose Acquisition vehicles. US exchanges have attracted at least 324 Spac listings, of which 309 are still searching for deals in 2021, compared with 10 in Europe, none of which have done a deal. Private firms have been attracted to the SPACs model of going public due to its low cost and less time-intensive process. (From Private Equity News, 3 June 2021)

 

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